Employers offer their employees’ health insurance as an added benefit. However, they also offer ancillary health insurance that extends beyond the standard coverage.
Employers generally offer health insurance as a perk to the job, but they also provide ancillary health insurance that goes beyond standard health insurance coverage. These programs may offer dental, vision, life, disability or other types of coverage that often come at low or no cost to employees.
What Is Ancillary Health Insurance?
Ancillary health insurance covers you beyond a regular health insurance company plan and is often part of an employer’s benefits package. A health insurance plan offers crucial coverage for some of the most important and expensive types of medical care but may not cover you for dental or vision care.
Health insurance also doesn’t help if you become disabled and can’t work. It additionally doesn’t provide funds if you have a critical illness. That’s where ancillary insurance programs like dental insurance, vision coverage, disability insurance and critical illness insurance help.
You can buy these kinds of insurance directly from the company through an individual plan. What Does Ancillary Health Insurance Typically Cover? Employers may offer multiple types of ancillary insurance. These types may supplement health insurance coverage that employers offer, or you can buy directly from the company but likely at a higher cost.
Ancillary health insurance plans include:
Critical illness insurance
Dental insurance is a type of ancillary health insurance that is standard in many workplaces. A typical plan covers some or all of the cost of preventative care and at least some more expensive care, such as crowns, root canals and oral surgery.
Dental insurance policies vary, but they generally cover: 100% of routine and preventive services: These dental services include dental x-rays, dental exams, teeth cleanings, fluoride treatments and dental sealants.80% of basic services:
Basic services may include fillings and simple tooth extractions.50% of major services: Dental plans may not cover major services at the same level as basic and preventive services. Major services may include root canals, dental bridges, crowns and implants, orthodontics and necessary, non-cosmetic veneers.
Dental plans frequently do not cover cosmetic procedures, such as veneers.
Some health insurance plans include vision coverage, but you can also buy separate vision insurance coverage. This type of insurance might cover eye exams, fittings of contact lenses and glasses, and the cost of these visual aids. These plans may sometimes offer discounts for corrective vision surgeries.
Employers often offer disability insurance to employees to protect workers who become injured or ill and cannot work. This type of insurance can help cover part or all of your salary until you can work again.
Employers may offer short-term or long-term policies or sometimes both.
The difference between short-term and long-term is the length of coverage.
Short-term disability insurance may cover you for three to six months, while long-term disability may help you for years if you cannot work.
Life insurance is another common ancillary benefit offered by employers that typically doesn’t require a medical exam to qualify. These group plans are generally connected to employment, so you lose coverage when you leave the job.
These policies also generally have low death benefits. For these reasons, you shouldn’t rely solely on an employer’s life insurance policy. You instead should think of it as supplemental coverage for individual life insurance policies like term life insurance, whole life insurance and universal life insurance.
This coverage pays out a lump sum if you have a specific type of injury resulting from an accident. Covered injuries typically include burns, deep cuts and dislocations. You can use this coverage to pay for costs not covered by health insurance, such as out-of-pocket costs like deductibles and ambulance services.
But you can also use the money for any reason, including paying your rent or for groceries. You may also have access to accidental death and dismemberment insurance through your employer. That coverage will pay out if you get killed in an accident or lose a limb or a function, including hearing, speech and sight, in an accident.
An AD&D policy pays a lump sum if you die in an accident or get a severe injury. The specific injuries eligible for payment will be listed in the policy.
Critical illness insurance
This type of coverage kicks in if you’re diagnosed with an illness listed in the policy. The illnesses that qualify under this coverage are typically serious, such as Cancer, though it might get limited to a life-threatening diagnosis End-stage renal failure, Heart attack, Major organ transplant, Multiple sclerosis Parkinson’s disease, Stroke.
As with accident insurance, people typically use these funds from a critical illness insurance payment to pay for expenses not covered by their health insurance, such as deductibles or the cost of travelling to a medical facility in a far-away place.
But you can use the lump-sum payment for any reason, including paying your mortgage.
Employer benefits packages may go beyond help for humans. One example is pet insurance. Pet insurance typically covers costs, such as exam fees, tests and emergency care. It may also help with things like medication and surgery.
Pet insurance plans are typically available in three varieties: Accident and illness plans: Covers injuries or illnesses, such as broken bones, cancer and hereditary conditions Accident-only plans: Covers only accident-related problems, such as a broken bone.
Wellness plans for routine care: Covers only routine care like wellness visits and vaccination As with virtually all the coverages on this list, individuals can instead purchase pet insurance separate from their employer.
But going through the workplace plan might get you a better rate.
How Does Ancillary Health Insurance Work?
Each insurance company has its own rule for how ancillary health insurance works. Some types of ancillary policies like critical illness and accident insurance provide a lump sum to the policyholder. The money can be used in any way.
Other ancillary benefits work much like a standard health insurance policy. For example, if you need dental care and have dental insurance, your plan covers a percentage of your costs, just as a health insurance plan covers a percentage of your health care costs.
This type of ancillary coverage is often limited, though. Many dental insurance plans pick up most of the tab for routine dental exams, but if you need a root canal, you likely still pay a sizable portion of the procedure yourself.
Employer-contributory ancillary benefits vs voluntary ancillary benefits Some companies pick up some or even all of the cost of ancillary coverage. This is known as an employer-contributory ancillary benefit—your employer pays 50% to 100% of the premium.
But other companies require that employees pay all or most of the cost of ancillary benefits, which is known as a voluntary ancillary benefit. In this case, your employer contributes zero to 40%.
This can still be a good deal for workers, though, as purchasing this type of insurance through an employer lets you buy into a group insurance plan, which is almost always cheaper than purchasing coverage as an individual.
If you’re responsible for part or all of the premium associated with ancillary benefits, the money typically will come out of your paycheck as a payroll deduction. The money usually is taken pre-tax, which offers another savings to you.
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 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.
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 are 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 makes 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 are 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. The employer may contribute 0 to 49% of the premiums on voluntary plans. 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 you don’t have a network provider). For life insurance claims, the beneficiary is paid directly (in case 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.