Ancillary insurance can be considered a subtype or type of major medical insurance. Ancillary insurance covers expenses not covered by a primary plan. This includes prescription drugs, vision and dental coverage for adults, and disability coverage. An ancillary policy will likely cover prescription drugs if major medical does not cover them.
How Does Ancillary Insurance Work?
A lot of ancillary benefits don’t have to be separate from primary coverage. An example: Someone may be eligible for ambulance transport as an ancillary benefit if they also have primary coverage.
The coverage and provisions of an ancillary insurance policy can vary. It is important to carefully read your policy and to understand the terms and conditions.
Ancillary insurance doesn’t have to be a one-size fits all deal. Employees may find purchasing “a la carte”, depending on their care needs, more cost-effective than buying a full coverage policy, especially if the employer is not contributing to the insurance.
Different types of ancillary benefits
A variety of ancillary benefits are available, including but not limited to:
- Adult vision and dental care
- Chiropractic services
- Transport of Ambulances
- Services for home health
- Durable medical equipment (e.g. wheelchairs and prostheses).
- Insurance for the disabled
- Life insurance
Employer-Contributory vs. Voluntary
Some plans are employer-contributive — employers can contribute to premiums between 50% to 100% and are usually processed through employee payroll deductions. However, voluntary plans require employees to pay either a greater percentage or the entire amount.
The deciding factor in choosing which plan to offer is benefit-cost. Employer-contributory ancillary benefits are often more expensive but may end up being the most cost-effective in the long run for large businesses with many employees.
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Employers might offer both types of ancillary protection so that employees can choose which plan is best for them.
Why should employers offer ancillary insurance?
Employers should offer ancillary insurance for a variety of reasons. They are designed to ease financial stress and increase worker productivity.
Early detection of health issues
Major health issues can be detected before they become serious. Vision care benefits, for example, may include routine eye examinations that can detect potential vision problems early. Employers will also save money on healthcare and decrease employee productivity if chronic conditions are detected early.
Employers can also be attracted and retained by ancillary benefits. Employers realize that ancillary benefits can be a win-win for both them and their employees. Employers can stand out from the rest by offering benefits that are not available in a competitive job marketplace.
Good benefits packages are a major reason why employees stay longer with their employers. Employees who can maintain their health and well-being will be more productive at work.
Peace of mind
Employees can be confident that their ancillary benefits will provide coverage for unexpected medical issues and necessary care. A lot of people find ancillary insurance particularly important, even if they don’t have major medical insurance.
Management of your health status
Employers can also use ancillary benefits to manage their workforce’s health. These preventive measures can help to keep major medical expenses down, which could be a benefit for the bottom line.
What is an Ancillary Insurance Broker?
An ancillary intermediary is an agency or broker that assists employees and employers in finding the right benefits plan. They offer a variety of plans and can help employees compare different policies. They can also negotiate premiums and rates with employers.
How to Find the Right Policy
Employers and employees must do their research when searching for the right ancillary coverage. An intermediary can help to make this easier. These are the questions you need to answer before choosing the right policy.
- Which is the best deal?
- How does the plan get funded?
- What are your health needs?
- Do you have any tax incentives?
- What level of coverage will you provide?
- What about employee families?
- What do other businesses offer?
- What will be the onboarding process like? Is there open enrollment?
- How can we measure the effectiveness of an ancillary policy?
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Renaissance for Employers. Ancillary benefits can be a win-win for both employees and business owners.
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Walsh Duffield. 2021. “Ancillary coverage: Dental, Vision and Hearing & Life“
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