Ancillary Benefits (Voluntary for employer or employee)

Guide

What are Ancillary Benefits?

Ancillary benefits are health insurance coverage that cater for miscellaneous medical costs that one incurs during a stay at the hospital. You can use these benefits to cover such expenses as blood, drugs, ambulance transportation and other medical supplies like bandages. The benefits are usually given on top of the main medical coverage. Some of these minor expenses are neglected and often times they are not factored in when one is taking a healthcare insurance cover. The good news is that what you get as ancillary benefits in the end may be 20 times more than the daily benefits that have been provided by the hospital.

Reasons to offer ancillary benefits as an employer

Ancillary benefits are beneficial to both the employer and the employee, which is why many companies are offering them today. The normal healthcare plans are not sufficient to cater for the entire wellbeing of employees. Employers have realized that even after the normal medical checkups and treatments, employees still need oral and vision care. Covering these costs too is an important preventive healthcare tool that could lower medical claim costs for the employer thereafter. Oral and eye checkups can for instance show early signs of major diseases and illnesses like diabetes.

Ancillary benefits will also lower FICA contributions for the employer. If the company exploits Section 125, which advocates for employees’ share of pre-tax money for these benefits, it may not have to contribute much thereafter. The benefits will also give you a good reputation amongst your employees. Many potential employees will be happy to work for the company, which is a good thing for the company in the employment market.

Ancillary employee benefits

The employee is the ultimate beneficially of the ancillary benefits. Some of the benefits he can enjoy include:

  • Peace of mind. Knowing that all other medical expenses will be well taken care of takes any worry you might have as an employee in the event you get sick. Ancillary benefits for employees offer great security among its other advantages. You have the full benefits of group insurance if you have the ancillary benefits cover.
  • Employees are entitled to some pre-tax money that they can use to pay for ancillary benefits. As an employee, you do not have to look for your own money to contribute to the coverage.
  • If the risk is spread out to a large number of people, the insurance premiums will remain reasonable, hence affordable to employees
  • The products covered under ancillary offer employees exactly what they need and what is important for them to enjoy a better quality of life. They for instance give you access to preventive care, which keeps you safe from major illnesses and diseases.

How do these benefits work?

Ancillary benefits are pure voluntary for employees or employer-contributory. If your employer is a contributor, he can pay half or all of the premiums. If it is voluntary, you will pay a larger percentage of the premiums and your employer will contribute the rest. Your contribution will be done through salary deduction after your employer has paid his part of the premiums. Once the benefits are used, a claim is submitted and the benefits are paid directly to the member or a network-contracted provider, if one was used.

Types of ancillary benefits

Here are common types of ancillary benefits that are packaged with group health insurance coverage:

  • Group life insurance: a group life insurance cover will be cheaper in the long run when compared to paying for one individual policy at a time. It will also cover everything that the employee needs including life and health insurances.
  • Accidental death and dismemberment insurance: these are the benefits that will compensate an employee in case of a serious accident that might result in death or loss of the functioning of certain body parts
  • Health savings account: this is a tax-advantaged account where you can save money for qualified medical expenses. Both the employer and the employee can make limited contributions to the account.
  • Short-term and long-term disability coverage: this kind of insurance cover will help employers and employees cope with absenteeism from work after an accident, injury or an illness.

Conclusion

Ancillary benefits offer comprehensive employee benefits at a cost effective manner. They are also beneficial to employers in the long run and therefore are a must have in any company.

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