What is Ancillary Health Insurance?
Before jumping into what ancillary health insurance is actually, lets know what is meant by ancillary in general term.
Ancillary is a means that is lower or secondary in class or rank but provides necessary support to the primary activities or operation of an organization, system. Just like dessert after main course. And that’s just what ancillary health insurance does.
Generally your traditional health insurance doesn’t cover deductibles, copays, or out-of-pocket expenses, ambulance transportation, blood, drugs, and other medical supplies like bandages etc. These all add financial burder on Insured’s head.
Here ancillary health Insurance plays a supporting role to reduce that burden. It also give benefits like such as dental, vision, life and disability insurance which lacks in traditional health plans.
Types of Ancillary Plans
There exists primarily two types of ancillary benefits, the one is voluntary benefits and the other one is employer contributory benefits.
In voluntary benefits, employees can choose the benefits they want, and not pay for benefits they may not need. In this scheme, the employer may contribute up to 49 percent of the premiums of employees insurance plans. It is convenient where employees can pay for voluntary benefits by payroll deduction at reduced rates.
While employer contributory benefits is an employer sponsored scheme where they usually pays 50 to 100 percent of the premiums of employees insurance plans.
What are ancillary health insurance products?
The various aspects covered in an ancillary health insurance or you can call ancillary health products are given below.
Vision Insurance is a wellness plans designed to reduce your costs for routine preventive eye care (eye exams) and prescription eyewear (eyeglasses and contact lenses). Vision plans generally cover or provide discounts on regular eye examination, glass frames, contact lenses and some even cover discounts for for LASIK and PRK.
Dental insurance, is a form of health insurance designed to pay a portion of the costs associated with dental care like annual cleaning, tooth replacement and gum care. This is one of the common type of ancillary benefits.
Disability Insurance, often called income protection, is a form of insurance that insures the beneficiary’s earned income against the risk that a disability creates a barrier for completion of core work functions. In the US a disabling accident occurs, on average, once every second. In that cases, these people are unable to work and maintain their foods and other necessary utilities. Here Disability Insurance encompasses paid sick leave, short-term disability benefits (STD), and long-term disability benefits (LTD).
Group Life Insurance
Group life insurance is a type of life insurance in which a single contract covers an entire group of working people owned by employer or an entity. Employer choose this as group policies are quite affordable and insurance cost is less than that of an Individual policy. Group insurance policies provide financial security to the families of the employees in case of mishappen, policies pay out a lump sum of money to beneficiaries. Term insurance is the most common form of group life insurance.
Employees having any kind of pet can take benefits from Pet Insurance which covers medical bills that a pet costs. Pet insurance pays, partly or in total, for veterinary treatment of injured pet or insured person’s ill. Some policies will pay out when the pet dies, or if the pet is lost or stolen.
Other Wellness Perks
Apart from above, an ancillary insurance prouducts also include other benefits and perks to keep you sound annd productive. It includes free medical screenings, smoking cessation programs, free gym memberships etc. An employer choose this so that their employee enjoy better health and reduce medical expenses.
Benefits of Ancillary Health Insurance
Definitely, ancillary Insurance is a supporting health Insurance, it has lots of supporting benefits that fits both employers and employees. Whether the employer contributes more, or the employee voluntarily purchases a plan, it is beneficial in various ways:
Benefits to Employees
It helps reduce taxes on their income through Pre-Tax Deductions. A pre-tax deduction is any money taken from an employee’s gross pay before taxes are withheld from the paycheck. These deductions reduce the employee’s taxable income, meaning they will owe less income tax.
As mentioned above, it provides various health care facililities to employees like vision care, dental care and disability insuranes facilities like paid sick leave, short-term disability benefits (STD), and long-term disability benefits (LTD).
It provides other health supportive perks like pet medical care facilities free or discounted gym membership, annual medical screening, smoking cessation programs etc.
It is quite afffordable and premiums to be paid is reasonable.
Benefits to Employers
It is good for company’s reputation in the marketplace if it offer ancillary benefits their to employees.
If employer provides ancillary insurance to its employees, then employer Federal Insurance Contributions Act tax (FICA) contributions will be reduced under the section of Section 125 of IRS code.
Employers do not pay for voluntary ancillary benefits or can share the cost with employees to keep costs down while pleasing employees.
Providing ancillary health benefits to employees keep them sound and healthy and in return, increases the productivity of the company or organisation.
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