Ancillary Benefits: The Overlooked Key to Employee Health and Savings


Ancillary benefits are a smart addition to health insurance plans, covering unexpected expenses such as ambulance rides, drugs, and medical supplies. Employers can offer voluntary or employer-contributory benefits, with the latter paying 50-100% of premiums. Ancillary benefits offer advantages such as the use of pre-tax dollars and coverage for preventative care. Dental and vision plans are popular among employers, as they can lower medical claims costs in the long term while promoting employee wellness. Life insurance is also a popular corporate benefit that can provide income protection in the event of a death. Ancillary coverage can even help catch early warning signs of serious health conditions.

Ancillary benefits are a type of health insurance coverage that covers any miscellaneous medical expenses that might pop up during a hospital stay. Miscellaneous expenses are things like ambulance transportation, blood, drugs, and even basic medical supplies like bandages. Ancillary benefits are usually added on top of your major medical coverage for an extra layer of protection.

Ancillary benefits overview

Ancillary benefits cover commonly overlooked healthcare expenses and are typically quoted as a multiple of the hospital’s daily benefits, such as 20x.

When it comes to employee health coverage, health plans alone just aren’t enough. That’s why many businesses are turning to dental and vision plans to round out their benefits packages. Studies show that these plans can actually be powerful preventive tools, potentially reducing costly medical claims in the long term. So not only do dental and vision plans keep your employees healthy, but they could also save your company money down the road.

Ancillary coverage can even help catch early warning signs of serious health conditions before they progress. An eye exam can reveal early symptoms of high blood pressure, diabetes, and more before they even show up in a physical exam.

While health insurance may not cover income protection in the event of a death, that’s where life insurance comes in as another popular corporate benefit. Group life insurance, in particular, is highly valued, with 9 million households reportedly having it through their employers, according to research firm LIMRA.

Voluntary and employer-contributory benefits

Ancillary benefits can be either voluntary or employer-contributory, with the employer typically paying 50-100% of premiums for the latter and 0-49% for the former.

Employees pay the remaining premium balance through payroll deduction after the employer’s contribution. When benefits are used, a claim is submitted and paid directly to the provider or member. In the case of life insurance claims, the beneficiary is paid directly.

Benefits of ancillary benefits for employers

  • Using Section 125 can lower employer FICA contributions by allowing employees to use pre-tax dollars for benefits.
  • Providing ancillary benefits can enhance a company’s reputation among employees and boost its competitiveness in the job market
  • Employees can use pre-tax dollars to pay for these benefits, and when the risk is shared among a large group, premiums remain affordable
  • Ancillary products also cater to workers’ needs by providing access to essential services that contribute to a good quality of life.
  • With dental and vision benefits, workers can receive preventive care in addition to treatment for existing problems.
  • Employees can have a sense of security

Key takeaways

  • Ancillary benefits cover miscellaneous medical bills during emergencies, including costly expenses like ambulance rides, drugs, and medical supplies.
  • They can be voluntary or employer-contributory, with the amount paid varying depending on the type of benefit.
  • Ancillary benefits offer advantages such as the use of pre-tax dollars and coverage for preventive care.
View Article Sources
  1. Ancillary Benefits: An Overview.” Health Insurance Association of America, 1999.
  2. The Value of Ancillary Benefits in Employee Benefit Packages.” Journal of Occupational and Environmental Medicine, 2018.
  3. The Role of Ancillary Benefits in the Provision of Health Insurance Coverage.” Journal of Health Economics, 2009.
  4. Ancillary Benefits and Employee Retention: Evidence from the Health Insurance Marketplace.” Journal of Human Resources, 2020.