What is supplementary insurance? How it could benefit you

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Complementary insurance is a subtype of health coverage, complementary to the main medical insurances. It covers expenses that may not be included in a primary health insurance plan, such as adult vision and dental care, disability insurance, prescription drugs and more. For example, if major medical care does not cover prescription drugs, an auxiliary policy probably would.

How does supplementary insurance work?

Most ancillary insurance benefits are not separate from the main coverage. For example, someone can have ambulance transportation covered as a perquisite benefit as long as they also have current primary medical coverage.

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Ancillary health insurance policies may vary in their coverages and provisions. As with any insurance, it is important to read the policy carefully and understand what is covered and what is not, such as ancillary benefits that allow a health savings account to offset dental costs with pre-tax dollars.

Supplemental insurance doesn’t have to be an all-or-nothing deal either. Depending on care needs, employees may find “à la carte” purchasing more cost-effective, especially if employers do not participate in the contributions.

Types of ancillary benefits

There are a variety of ancillary benefits including, but not limited to:

  • Vision and dental for adults
  • Chiropractic services
  • Ambulance transport
  • Home health services
  • Durable medical equipment (e.g. wheelchairs and prostheses)
  • Disability insurance
  • Life insurance
  • Hearing
  • ASF/HSA

Employer-contributory vs voluntary

Some plans are employer contributory — employers can contribute between 50% and 100% of premiums and are generally processed through employee payroll deductions. But with voluntary plans, employees pay a higher percentage or the full amount.

The benefit-cost ratio is the determining factor of which plan to offer. Ancillary benefits paid by the employer are often more expensive, but may be the most profitable in the long term for large companies with many employees.

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Employers can choose to offer both types of ancillary coverage, so employees can choose the plan that’s right for them.

Why should employers provide supplementary insurance?

There are many reasons why employers should provide supplemental insurance, and they focus on easing employees’ financial stress and increasing worker productivity.

Early detection of health problems

Ancillary benefits can help detect major health issues before they arise. For example, vision care benefits may include routine eye exams, which can help identify potential vision problems at an early stage. Additionally, employers will save on health care costs and reduce lost employee productivity when chronic conditions can be detected early.

Investment in the workforce

Perquisites can also attract and retain employees. Many employers realize that perquisites are a “win-win” for themselves and their employees. Employers can set themselves apart from their competitors by offering benefits not usually available in a competitive job market.

Most employees are more likely to stay with their employer because of good benefits. Additionally, when employees can maintain their health and well-being, they are likely to stay productive at work.

Peace of mind

Employees can rest assured that their perquisites will cover unforeseen health issues and necessary care. Some might find supplemental insurance especially important if they don’t have major medical insurance.

Health management

Ancillary benefits can also help employers manage the health status of their employees. With these preventative measures to maintain employee health care, major medical expenses can be lower and less frequent, which benefits the bottom line.

Good to know

Choosing among health care plans depends on one’s care needs. Different plans have different levels of coverage – and also different out-of-pocket costs. Auxiliary fonts work the same way. As a rule, auxiliary policies vary in price and are less expensive than the main medical plans. But, depending on the tier level, they may also have more coverage limitations.

What is an ancillary insurance intermediary?

A collateral insurance intermediary is an insurance broker or company that helps employers and employees find the best benefits plan for their needs. Intermediaries have a wide range of plans to offer and can help employees compare and contrast different policies. They may also work with employers to negotiate rates and premiums.

How to find the right policy

Research is essential for employers and employees when looking for the right supplementary insurance, and an intermediary could facilitate the process. Choosing the right policy means finding answers to these questions:

  • Which is more affordable and within budget?
  • How can the scheme be funded?
  • What are the health needs?
  • Are there tax incentives?
  • What will be the level of coverage?
  • Will coverage extend to employees’ families?
  • What do other companies offer?
  • What is the integration process? Will there be open registrations?
  • How to measure the effectiveness of the complementary insurance contract?

Our in-house research team and on-site financial experts work together to create accurate, unbiased and up-to-date content. We check every stat, quote and fact using trusted primary resources to ensure that the information we provide is correct. You can read more about GOBankingRates processes and standards in our Editorial Policy.

About the Author

Kiran Shahid has over 8 years of writing experience and has worked for various clients around the world. With Digital Marketer certifications and a master’s degree in entrepreneurship, she has been able to implement creative ideas and innovative strategies for her clients. Kiran has a knack for creating compelling content with an engaging tone of voice. In her spare time, she likes to travel and try different cuisines.

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