Ancillary Benefits: What They Are and How They Attract and Retain Employees

decorative image showing a woman getting an eye test at an optometrist's office

Offering ancillary benefits that complement traditional health care is an effective strategy for attracting top talent and retaining employees.

In today's tight labor market, it's more important than ever to design the most complete and attractive benefits package possible. Employee benefits play a crucial part in providing the type of high-quality employee experience that helps organizations attract top talent and retain employees.

Offering ancillary benefits, additional types of coverage that complement a traditional health plan, can help your organization land and retain top talent without breaking your budget. While there are some that have become virtually standard, like dental, vision and life insurance, others signal to your employees that you're going above and beyond to help them feel cared for.

Common ancillary benefits

The benefits an organization decides to offer vary based on many factors. The specific plan or insurance company supplying coverage, as well as the details within those insurance policies, can heavily inform decisions around which benefits make the most sense for an employer to offer. Employees' priorities and attitudes also play a part, so it's important to understand what your employees need before finalizing your offerings.

Here's a look at some of the most common benefits.

  • Dental benefits. Dental insurance plans usually cover preventative care, such as regular checkups and cleanings. Depending on the plan offered, more involved procedures like fillings or emergency oral surgery may require paying a deductible before coverage kicks in. Although not every dental plan has it, those that cover at least some portion of orthodontic work allow employees to take full advantage of their benefits and improve their dental health. Braces aren't just for teenagers anymore.

  • Vision coverage. As more people use technology at work, especially backlit screens like monitors and mobile devices, eye health requires more attention now than ever. This shift means vision insurance is becoming more central to group offerings. Coverage typically includes an annual eye exam, ocular health screenings and access to discounts on items such as prescription eyeglasses and sunglasses.

  • Life insurance. Offered by 6 in 10 private-sector employers, life insurance provides financial protection to employees' families when they pass away. Types include term life, whole life and fixed annuity or income-based. There are also high guaranteed issue amounts for group life insurance, including some that do not require employees to answer medical questions to receive benefits.

  • Disability insurance. Short- and long-term disability coverage can provide income replacement if an employee gets injured on the job or cannot work for a sustained period of time. For longer disability claims, rehabilitation services and other incentives are designed to improve return-to-work outcomes for employees.

  • Health savings accounts (HSAs) and flexible spending accounts (FSAs). Insurance helps employees access the care they need, but employers can offer additional support for the out-of-pocket costs associated with that care. These accounts set aside pre-tax funds that can ease the burden and improve access to important health care.

  • Other types of increasingly popular benefits. Other benefits that can be attractive to employees include pet insurance, child care benefits, college savings, elder care services, fertility services, adoption support and behavioral health coverage.

How to choose the right benefits

Every business will have different needs when it comes to benefits. One thing is certain: Selecting the right offerings comes down to understanding what your employees and potential prospects want the most.

According to a recent study, 45 percent of employees view life insurance as a top benefit that they want from their employer, second only to employer-covered health care. Furthermore, 1 in 10 workers would take a pay cut to have access to better benefits. This means that employers are tasked with being creative in their offerings to maximize employee enthusiasm and retention.

"As a business owner, it's important to know that offering benefits like dental or vision insurance could make a difference when competing for top talent with larger organizations," says LaTasha Ahl, vice president of sales and licensed health and benefits agent at Automatic Data Processing Insurance Agency, Inc. (ADPIA®), an affiliate of ADP®.

To assist you in this area, Ahl recommends that you survey your employees to learn what their individual needs are and what they expect you to offer them.

"Getting regular employee feedback is essential because you want to be on the same page," Ahl says. "If you know what your employees need, you'll offer what employees will actually use, saving everyone time and money."

How offering ancillary benefits helps the organization

Employees need more than a regular health plan to stay healthy. Offering benefits that allow them to get the preventative care they need can prevent bigger health issues down the road that could potentially affect their work performance and attendance.

For instance, an annual dental visit could help spot periodontal disease before it becomes a serious problem. A simple eye exam could address vision concerns and detect health issues such as glaucoma, diabetes and hypertension. Equipping employees with resources like savings and spending plans to help pay for care can ease the stress associated with maintaining one's health or managing a difficult diagnosis.

The impact that ancillary benefits have on the day-to-day employee experience may be challenging to quantify, but they are easy to imagine. When employees have access and resources to meet their health and wellness needs, they may be more likely to get or stay healthy, feel happier and experience higher levels of job satisfaction. At the same time, the organization benefits from reduced absenteeism, higher engagement and increased productivity.

Offering benefits that address employees' real-life circumstances can also be a valuable tool for employee retention and talent attraction. Historically, benefit coverage has ranked near the top of priority lists for employees and job seekers, after compensation. According to Pew Research, access to employee-sponsored health care is a key priority for 79 percent of employees.

"At the end of the day, you need to do what's best for your business. Offering ancillary benefits can be a win-win for everyone involved," concludes Ahl.

Learn more

Talk to the experts, like those at ADPIA®. Discussing your business needs with a licensed insurance broker or agent will help you create the most effective benefits package for your company. To learn more about protecting your employees and your business, check out ADPIA for assistance with the latest in ancillary benefit offerings.

Automatic Data Processing Insurance Agency, Inc. (ADPIA) is an affiliate of ADP, Inc. All insurance products will be offered and sold only through ADPIA, its licensed agents or its licensed insurance partners; One ADP Blvd. Roseland, NJ 07068. CA license #0D04044. Licensed in 50 states. Certain services may not be available in all states with all carriers. Some carriers may charge an additional fee for services. This information is not intended as tax or legal advice. If you have any questions, contact a tax or legal professional. ADP, the ADP logo and ADPIA are registered trademarks of ADP, Inc. Copyright © 2023 ADP, Inc. All rights reserved