Ancillary benefits are a secondary type of health insurance coverage that covers miscellaneous medical expenses that are incurred during a stay at the hospital. Ancillary benefits can cover expenses such as ambulance transportation, blood, drugs, and medical supplies like bandages. These benefits are usually layered on top of major medical coverage.
Breaking Down Ancillary Benefits
Ancillary benefits are offered to cover those expenses which many neglect to factor into the cost of healthcare. They are usually quoted as a multiplier of daily benefits provided by the hospital. For example, an ancillary policy may cover 20-times this daily benefit.
Why Companies Offer Ancillary Benefits
Health plans aren't enough to keep employees healthy because they still need oral and vision care. Covering costs for these insurances make sense for companies because research shows that dental and vision plans can be effective, and preventive, healthcare tools that might lower medical claims costs in the long run. For example, early symptoms of high blood pressure, diabetes, and other diseases can be detected in an eye exam before showing up in a physical.
Health insurance also doesn't provide income protection in the event of a death; this is the domain of life insurance – another popular corporate benefit. Group life insurance has a high-perceived value as well. According to the U.S. Bureau of Labor Statistics, as of 2010, 96 percent of employees who had access to group life insurance took advantage of it.
How Ancillary Benefits Work
Ancillary benefits are either voluntary or employer-contributory. On employer-contributory ancillary benefits, the employer usually pays 50 to 100 percent of the premiums. On voluntary plans, the employer may contribute 0 to 49 percent of the premiums.
Through payroll deduction, employees pay the premium balance left over after the employer contribution. When an employee uses their benefits, a claim is submitted, and benefits are paid directly to the network-contracted provider or to the member (if a network provider is not used). For life insurance claims, the beneficiary is paid directly (in the event of a death).
Benefits of Ancillary Benefits to Employers
- Lower employer FICA contributions if the business takes advantage of Section 125, which allows employees to pre-tax dollars for these benefits
- Ancillary benefits enhance the employer’s reputation among employees
- Offering ancillary benefits makes a business more competitive in the employment marketplace
Benefits of Ancillary Benefits to Employees
- They can use pre-tax dollars to pay for ancillary benefits
- When the risk is spread among a large group of people, premiums stay reasonable.
- Ancillary products respond to workers’ needs to access services that are important to having a good quality of life
- With ancillary dental and vision benefits, workers get preventative care, not just care when a problem develops
- Employees can enjoy peace of mind and security that comes with ancillary benefits and group insurance.