With the right strategies, employers can offer ancillary benefits while remaining budget-conscious.
Ancillary benefits are additional benefits that you offer on top of your health insurance plan. Dental, vision, life and disability insurance are some of the most common. In today's tight labor market, it's more important than ever to offer a more comprehensive package to help land the top talent.
These benefits can also keep your employees healthier, which could lower your health care costs. For example, if employees have an annual eye exam under a vision plan, the eye doctor might catch non-vision health problems like diabetes early, according to the American Optometric Association.
It's understandable to be concerned about the cost of adding more benefits, but there are ways to provide these features at little to no cost. Chris D'Ambrosio, senior vice president and general manager of Automatic Data Processing Insurance Agency, Inc. (ADPIA®)*, explains cost-effective strategies to offer ancillary benefits.
Review What you Already Have
Your current benefits already may include extra perks that you aren't using. "Guardian offers a tuition reimbursement program for members who sign up for coverage with Guardian through their employer," says D'Ambrosio. "Some carriers such as Sun Life Financial and Unum include an Employee Assistance Program, a mental health support service for employees, as part of their group life policies."
Read the details of your current plan to see if there are any benefits your employees aren't using. If you work with an insurance broker or agent, you could ask them for help in reviewing what is already available.
Look for Potential Discounts
Some carriers offer discounts when you sign up for multiple lines of insurance. For example, if you sign up for both health and dental with the same insurance company, you may receive a lower price on the dental coverage. You could use the savings from the bundled discount to pay for even more benefits.
"Let's say your group dental plan costs $800 a month and adding vision insurance with the same carrier earns you a 5 percent premium discount with that carrier," says D'Ambrosio. "That saves you $40 a month, enough to set up a small $15,000 life insurance plan for employees."
Promote Voluntary Benefits
Voluntary benefits are when you offer additional optional policies like vision, life and dental insurance for your employees. While you can pay for all or a portion of the premium, you can also set up these plans so that employees have to pay for the coverage themselves. Even if you don't pay anything for the employee premiums, D'Ambrosio says you should still promote this as an ancillary benefit. Other types of voluntary benefits that can be offered include accident, cancer, and critical illness policies.
"Insurers generally charge lower group rates on these plans," he says. "Your employees can sign up for this coverage at a discount compared to what they would pay to sign up on their own, outside of your company. It's a win-win because they save money while you can choose not to pay anything or provide partial premiums to offer the benefit."
Sign up Only for What you Need
You don't need to present the most expensive version of an ancillary benefit for it to be worthwhile. "For vision, consider plans that limit the number of contact lenses employees receive per year, or restricting the plan to a discount program only," says D'Ambrosio. "For dental, you could limit coverage to in-network dentists or remove high-cost benefits that employees rarely use, like adult orthodontia."
D'Ambrosio recommends that you survey your employees to learn what they want from their benefits. That way, your plan will offer what employees actually use, which can limit costs.
Finally, as you design your package, consider working with a licensed insurance broker or agent. They can help you find the best savings for ancillary benefits while making sure you get the most out of your current plan. With their help and these strategies, you can offer your employees more while keeping within your current budget.
*Automatic Data Processing Insurance Agency, Inc. (ADPIA) is an affiliate of ADP, LLC. All insurance products will be offered and sold only through ADPIA, its licensed agents or its licensed insurance partners; 1 ADP Blvd. Roseland, NJ 07068. CA license #0D04044. Licensed in 50 states. All services may not be available in all states. This information is not intended as tax or legal advice. If you have any questions, contact a tax or legal professional.
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