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Ancillary Benefits

Enhancing Your Employee Benefits Program

Ancillary benefits are insurance/benefit plans that help round out the insurance component of an employee benefits program. Ancillary benefits include long term care insurance, short-term disability insurance and dental/vision coverage. TheseEmployee Benefits benefits can be offered on a voluntary basis (employee pays for the coverage), or employer funded (with substantial group pricing discounts). Some employers self insure these benefits internally, or utilize an outside administrator.

Employers should consider their ability to access network discounts for vision/dental and the inherent advantages of an outside administrator adjudicating claims (administrative efficiency, access to claim logic and a third party paying the claim instead of the employer) before determining whether they should internally administer the dental/vision and short term disability.

A few reasons why you may want to consider offering this coverage include:

Long Term Care

Typically, an employer will offer a core benefit with the employee buying up to broaden their coverage. If purchased at a young age, this is an affordable benefit. Consider that half of women (one third of men) over the age of 65 will spend some time in a nursing home—24 percent for a year or longer.

According to a MetLife market survey conducted in 2003, the average cost for a nursing home in Chicago was $51,876. Group long term care policies offer coverage for home health care at approximately 50 percent of the nursing home rate.

Short Term Disability

Pregnancy (normal and with complications) causes 29 percent of short-term disabilities, while 16 percent of short-term disabilities are due to injuries and back disorders. There can be a correlation between Work Comp instances and the lack of short-term disability coverage.

Dental coverage

Signs of serious disease often appear in the mouth before they manifest in other parts of the body, which means your dentist might be the first to notice a potential health problem. Add in the fact that a root canal and resulting cap can cost in the neighborhood of $2,000 (dental implants can cost around $4,000) and dental can be a very important benefit in attracting and retaining employees. This benefit is offered by 66 percent of employers who offer health insurance.

Vision coverage

Besides helping you see clearly, eye examsYour eyes provide your opthalmologist/optometrist with a clear view of your blood vessels, and can detect diabetic eye disease before symptoms appear and help assess your overall health.

This benefit is very cost effective (approximately $21 per family per month) when one considers the fact that 70 percent of the US adult population wears some form of vision correction. This benefit is offered by 41 percent of employers.

Ancillary benefits are generally reasonably priced (either fully insured or to administer) because of the limited amount of coverage that they offer. In some instances the pricing differential between employer sponsored (and the requisite participation requirement) ancillary benefits and voluntary ancillary benefits is so substantial that an employer should strongly consider offering the coverage to optimize the value for the dollar. Adding an ancillary benefit can also make a major change in the Foundation benefit (medical insurance) more palatable to your employees.