Contributory vs. Voluntary Benefits in Ancillary Benefits
When considering what type of health benefits to offer your employees, it’s important to consider ancillary benefits to create a more comprehensive benefits package. Ancillary benefits are a secondary type of health insurance that can cover a variety of expenses that aren’t included in a standard health insurance policy.
From vision and dental coverage to disability insurance, there are many types of ancillary benefits to consider offering employees. But before choosing which benefits to include, it’s important to understand the difference between employer-contributory benefits and voluntary benefits.
Here’s everything you need to know about contributory vs voluntary benefits.
Contact KSA Insurance today to learn more about your options for ancillary benefits (contributory vs voluntary benefits) and get a custom quote.
What are Ancillary Benefits?
Ancillary benefits provide coverages that aren’t typically included in traditional health insurance policies. These costs are often neglected when considering the total cost of healthcare and can greatly increase employees’ out-of-pocket expenses after hospital stays.
These benefits are often used to supplement group health insurance plans provided by employers in order to create a more appealing and comprehensive employee benefits package.
Ancillary benefits often cover medical expenses that individuals may incur during hospital stays, such as drugs or medical supplies.
Health insurance plans often lack other important coverages, including vision, dental, and life insurance, making ancillary benefits a necessary inclusion for employers that want to ensure their employees are fully covered.
Common Types of Ancillary Benefits
If your organization is considering offering ancillary benefits as part of your employee health insurance program, there are many common benefits to consider, including:
- Vision and dental coverage
- Disability insurance
- Life insurance
- Health saving accounts (HSAs)
- Flexible spending accounts (FSAs)
- Employee health stipends
Aside from these popular benefits, there are other types of ancillary benefits that are less common but are worth considering, including:
- Pet insurance
- Wellness programs
- Gym stipends
- Hearing insurance
- Accidental death & dismemberment insurance
Benefits like these ensure employees have access to the services they need to maintain good health.
Employer-Contributory vs. Voluntary Benefits
Ancillary benefits can be offered as employer-contributory benefits or voluntary benefits. The primary difference comes down to the percentage of the premiums that each party pays.
What are Employer-Contributory Ancillary Benefits?
With employer-contributory benefits, the employer is responsible for paying anywhere between 50% and 100% of the premiums while the remaining costs are deducted from the employee’s paycheck.
Employer-contributory ancillary benefits are generally better for employees as they help them save money while receiving the same great coverage.
What are Voluntary Ancillary Benefits?
With voluntary ancillary benefits, employers are responsible for paying between 0% and 49% of the premiums associated with the benefits, and the employees pay for 51% to 100% of the premiums.
In either case, when an employee uses their benefits, they must submit a claim, and the benefits are paid to the network provider or to the member.
While some employers choose to contribute less to their ancillary benefits programs, others contribute more to encourage employees to use their benefits more often.
Why Offer Ancillary Benefits to Employees?
There are many reasons why employers should consider offering ancillary benefits to their employees.
Primarily, more comprehensive benefits packages help employers attract and retain top talent. High-quality benefits packages improve employee morale and tend to make them more satisfied with their employment.
Ancillary benefits also give employees access to the health services and preventative care they need to stay healthy, making them less likely to take excessive sick days.
There are plenty of other great benefits to employers that offer ancillary benefits:
- Pre-tax dollars can be used to pay for ancillary benefits
- Employees gain more peace of mind
- Employers can better support their employees’ financial wellness
- Premiums are often more reasonable when risk is spread across a large group of people
- Providing ancillary benefits can improve the employer’s reputation
Ultimately, while offering ancillary benefits may increase employer expenses, they offer long-term benefits to employers and employees that greatly offset their costs.
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Ancillary benefits include a wide range of important coverages that help employees get more out of their benefits packages. Understanding the difference between employer-contributory ancillary benefits and voluntary ancillary benefits can help you create a comprehensive benefits package that attracts top talent in your industry.,
At KSA Insurance, we work with employers in South Carolina and across the southeastern United States to help them create comprehensive and affordable employee benefits packages that offer necessary coverages for your employees.
Contact us today to get a quote and learn more about ancillary benefits for employers.
