2013 - The Year of Ancillary Benefits
By Mary F. Drueke, FSA
Vice President of Employee Benefits
Swartzbaugh-Farber & Associates, Inc., a UBA Partner Firm
The employee benefits world will continue to get more complicated and more personal over the next year. Employers will be faced with many tough decisions as they prepare to "play or pay" in 2014, and most of 2013 will be spent modeling the financial impact of health care reform and ensuring that employers are ready for implementation of the law. While employers need to make sure they are offering affordable benefits that provide minimum value, as a result of the new exchanges coming online and less of their own budget going toward major medical coverage, they will have a new opportunity to offer increased value through ancillary benefits -- an area expected to grow substantially in the coming years.
One of the few things we do not expect to change is that employers will continue to need to attract and retain the best employees. How they differentiate themselves, however, will vary based on their size, industry and region. Ancillary (which often are voluntary) benefits such as dental, life, vision, long-term disability, critical illness and paid-time off, are going to become more important as employers use these types of benefits to attract key employees, especially at the executive level.
Employers can still offer employees the ability to choose from a menu of benefits that meet their employee's needs, even if the employees pay the full cost of those benefits. Ancillary benefits on a group platform can be purchased with higher guarantee issue limits, fewer underwriting hassles and usually at a lower premium than if purchased on the individual market. Plus, many of these benefits can be paid with pre-tax dollars, which is a plus for both the employee and the employer.
The first step in crafting a benefits package with Ancillary choices is knowing what others in your industry or area are offering. United Benefit Advisors (UBA) just announced preliminary findings from its Ancillary Products Survey based on responses from nearly 12,000 employers, which highlights some key differences in product line popularity by employer size, industry and region.
For example, only 0.5 percent of the employers in the survey offer on-site clinics; however, among employers responding to the question with more than 500 employees, the average was 7.4 percent. Perks such as pet insurance revealed similar differences for employers responding, with 8 percent of employers with 1,000-plus employees offering this benefit, but less than 0.5 percent of smaller employers with fewer than 200 employees included it in their benefits packages.
Results prove that a small to midsize business should not necessarily be comparing themselves to the national average. You can read more details about the survey findings here.
Employees these days are more diverse than ever and because of this, each employee has their own unique needs. Ancillary benefits provide employers with the ability to meet these needs on a variety of levels. Providing a robust benefit package consisting of a variety of ancillary benefits will allow employers to attract and retain the best employees of all ages and talent levels.