Ancillary Benefits

Ancillary benefits are a secondary type of health insurance coverage that covers miscellaneous medical expenses that are incurred during a stay at the hospital. The definition of ancillary benefits means it 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 so they are purchased in conjunction.

Understanding Ancillary Benefits

Ancillary benefits are offered to cover those expenses which many neglects 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.

Key Takeaways

  • Ancillary benefits are a secondary type of health insurance coverage. It takes care of miscellaneous medical bills that may add up in an emergency.
  • Ambulance rides, bandages, drugs, and other medical supplies are costly, and ancillary benefits will usually cover those expenses.
  • Ancillary benefits either a voluntary or employer-contributory benefit and the amount paid varies depending on the type of benefit.
  • There are many positive aspects to ancillary benefits, including, but not limited to, the use of pre-tax dollars to pay for them, and they pay for preventative care as well.

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. 

Ancillary benefits can protect you from unexpected expenses related to hospital stays.

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 global research firm LIMRA, 9 million households have group life insurance through their employers.

Voluntary vs. Employer-Contributory

Ancillary benefits are either voluntary or employer-contributory. On employer-contributory ancillary benefits, the employer usually pays 50 to 100% of the premiums. On voluntary plans, the employer may contribute 0 to 49% 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).

List of 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
  • 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 have 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.