Ask a Zenefits Advisor: What are Ancillary Benefits, and How Should I Prioritize Them?

Dear Bud,

We recently saved a bunch of money switching medical insurance carriers, and I’d like to re-invest the funds back into my employees. What other types of ancillary benefits should I consider, and how should I prioritize them?

Signed,
Considering Ancillary Lines for Employee Benefits

C.A.L.E.B.,

Dental, life, vision insurance, and short-term and long-term disability insurance are the most common ancillary benefits that employers buy for their employees. As far as premiums, dental is the most expensive, while vision typically costs the least. As far as impact, life and disability make a big difference if and when employees need them.

Employees, if they have a long illness or accident requiring them to miss work for an extended time, should have an acceptable amount of income to deal with their plight. The cost of providing disability coverage is relatively inexpensive—usually less than 5% of medical costs. Life insurance is another important ancillary benefit because of how the absence of a wage earner affects a family. It, too, is of very minimal cost to employers compared to the benefit it provides.

I personally think that dental should be considered on the same level as medical. I would love to see medical carriers incorporate dental coverage as an integral part of the overall health plan. Until then, my feeling is that employers should consider offering a good dental plan alongside their medical plan (and contribute to it on the same basis as the medical).

Let’s see how this would look in practice.

A minimal ancillary benefits package would run about $20-$30 per employee per month and include:

Voluntary dental
Company-paid STD/LTD/LIFE
Voluntary vision

An average ancillary benefits package would run about $60-$100 per employee per month and include:

Dental PPO paid by company at 50-75% for employees & 25-40% for dependents
Company-paid STD/LTD/LIFE
Company-paid vision

For those companies intent on retaining their employees and recruiting key talent, this robust ancillary benefits package would run about $90-$150 per employee per month and include:

Dental PPO with orthodontia paid by company for employees & 50% for dependents
A $50,000 group term life benefit paid by company, coupled with a voluntary life plan which allows employees to increase their life insurance on a guaranteed issue basis
Company-paid STD/LTD plan
Company-paid vision

For the most part, my experience has been that the majority of business owners truly care about the welfare of their employees and their employees’ families. Employees know if management cares about them, and statistics show that it matters. When presented with the option to stay with you or go across the street for the same (or slightly less) money and better benefits, you’re likely to lose them every time.

C.A.L.E.B., it sounds like you put your people first. As you dig into ancillary benefits, if you have further questions, my inbox is always open.