What are ancillary benefits?
Ancillary benefits are a secondary kind of coverage used to supplement group health insurance. Ancillary benefits cover the miscellaneous medical expenses that occur during a hospital stay that are not included in a healthcare policy. Many individuals don’t factor these seemingly insignificant costs into the price of healthcare, and ancillary benefits step in to take care of these surprise expenses. Ancillary benefits can also include other sought-after employee benefits too, such as dental, vision, life, disability, and other types of insurance.
Ancillary policies are typically quoted as a multiplier of the hospital’s daily benefits, such as coverage for twenty times the benefit. In some cases, ancillary benefits are voluntary. Under other circumstances, the employer contributes to the pre-tax benefit..
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When do I need to be aware of ancillary benefits?
If you’ve recently spent some time in a hospital, or if you’re an employer offering health care benefits to employees, you’ll want to understand more about ancillary benefits. These benefits cover ambulance rides, medications, and medical supplies related to medical care. Even if someone is given one acetaminophen while in the hospital, it’s going to cost him or her, and ancillary benefits will take care of that cost.
What is important to know about ancillary benefits?
Ancillary benefits can involve voluntary plans, where the employer contributes from 0 to 40% of the premium, or employer-contributory ancillary benefits, where the employer pays 50 to 100% of the premium. Employees pay whatever portion the employer does not cover through payroll deductions. The employer may cover the full cost of an employee’s health plan and leave it to the employee to decide to purchase a voluntary dental or vision plan. Often, the offering of an employer-contributory ancillary plan encourages more employee enrollment.
There are advantages to both the employer and the employee when it comes to ancillary benefits. Whether the employer contributes more, or the employee voluntarily purchases a plan, it is beneficial in various ways:
- Pre-tax dollars are used to pay for these benefits, which lowers an employee’s taxable income.
- An employer offering ancillary benefits will be at the top of the competition when searching for valuable employees to join the team.
- Some ancillary products are available for benefits not included in many typical health care plans, such as vision insurance and dental insurance, and preventative care is often included too.
- Premiums are fairly reasonable with a generally large group of people participating in the plan.
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