Ancillary Benefits: What They Are and How to Use Them

The word “ancillary” sounds pretty technical. In the military world, ancillary units might provide logistical support during combat, while in astronomy, a spacecraft’s ancillary systems would provide critical life support and communication throughout a mission. 

So, ancillary is a word we use to describe essential support, and that’s exactly what ancillary benefits do. This guide explores them in more detail, explaining why you should offer them and the various ancillary benefits available. 

What are ancillary benefits?

Ancillary benefits are a supplementary type of benefit that employees receive alongside their regular compensation. 

In the context of employee health benefits, ancillary benefits are a secondary level of support that supplement your primary health insurance coverage. While group health insurance typically covers medical treatments and procedures, ancillary benefits are a pre-tax way to offer additional services such as dental, vision, and disability coverage. 

Ancillary benefits may also encompass programs or resources aimed at promoting healthy lifestyle choices, such as gym memberships, wellness classes, or mental health support. Although they may not relate directly to medical treatment, this ancillary provision nonetheless significantly impacts an employee’s overall health and happiness. 

How do ancillary benefits differ from core benefits like health insurance?

Part of the difficulty in defining ancillary benefits is understanding how they differ from your primary offering. So, how can you tell which is the main course and which are the side dishes? 

If we take medical benefits as an example, your primary health insurance would cover medical care for illness or injuries. Ancillary benefits, on the other hand, typically cover preventive and routine services rather than acute medical treatment. Often, you’ll see them used together to provide comprehensive, holistic coverage to enhance your employees’ lives, both during and beyond any emergency situations. 

Example: If a patient requires a hospital stay for a broken arm, this would be covered by their primary health insurance. However, they may also need occupational therapy during recovery, which would fall under ancillary benefits.

Here’s a quick overview of the differences between the two types of employee health benefits: 

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10 common ancillary benefits

There are plenty of different types of ancillary benefits beyond those used to bolster medical coverage. Here are 10 types you might add to your employee benefits package. 

1. Life and disability insurance 

Life and disability insurance offers reassurance to employees that their families will be protected in the event of their death, injury, or any long-term illness that prevents them from working. Employers can reinforce their commitment to their workers’ well-being by offering: 

• Life insurance: A lump-sum payment paid to beneficiaries in the event of an employee’s death 
• Short-term disability insurance: This covers income loss during a temporary period when an employee cannot work. 
• Long-term disability insurance: This offers extended financial support for prolonged illnesses or permanent disability.

2. Dental and vision insurance

When medical insurance policies don’t include dental and vision coverage or expenses, ancillary supplements pick up the tab and enable employees to manage their routine healthcare needs affordably. 

• Dental insurance includes preventive care (cleanings), restorative work (fillings, crowns), and orthodontics.
• Vision insurance covers eye exams, prescription glasses or contact lenses, and sometimes elective surgeries.

3. Voluntary plans 

Voluntary ancillary benefits are an option employees can pay for through payroll deductions. They’re entirely flexible to meet your employees’ unique personal needs. For example, they might choose options like: 

• Telehealth access  
• Legal services 
• Identity theft protection 
• Critical illness insurance
• Pet insurance
• Travel insurance 
• And more … 

4. Wellness and lifestyle benefits

Wellness and lifestyle programs promote overall physical and mental health, encouraging healthy habits and work-life balance. Alongside being a perk that could attract and retain top talent, wellness benefits may also reduce absenteeism and increase productivity by encouraging healthier lifestyles. Benefits may include: 

• Gym memberships 
• Nutrition counseling 
• Smoking cessation programs 
• Sleep improvement resources 

5. Financial wellness benefits 

Employees can easily become distracted if they’re struggling to make ends meet. Financial wellness benefits are simply tools and resources to improve your workers’ financial health while reducing the stress associated with money management. These might include: 

• Retirement plans (e.g., 401(k) matching)
• Student loan assistance
• Budgeting workshops

6. Mental and emotional health benefits 

A whopping 88% of employees report experiencing burnout, while 77% state work stress negatively affects their personal lives, according to new data from My Perfect Resume. Beyond the mental strain of work itself, your employees may also be struggling with personal mental health challenges related to depression, anxiety, bereavement, or difficulties in their relationships. 

Mental and emotional health benefits can support them by offering: 

• Employee assistance programs (EAPs) 
• Therapy coverage 
• Resilience training 
• Bereavement support 
• Cognitive behavioral therapy

7. Work-life balance benefits

Part of taking the strain off your employees is helping them manage their personal and professional responsibilities. Your ancillary support could include: 

• Flexible work schedules 
• Childcare assistance 
• Elder care support 
• Paid parental leave 

8. Rewards and recognition 

Employees who receive praise and appreciation from their colleagues and leaders are happier and more productive at work. The latest research from Reward Gateway reveals the top reasons employees feel demotivated: feeling undervalued (43%), having a bad manager (43%), and lack of recognition (40%.) 

A rewards and recognition program is a type of ancillary benefit you might use to thank employees for their contributions. These options are affordable and include: 

• Employee discounts on retail, dining, or travel
• Social events, such as lunch with the boss
• Awards programs, such as Employee of the Month or Year 
• Points-based reward programs, such as giving employees points for a job well done that they can redeem for gifts or prizes

How do ancillary benefits enhance employee satisfaction and retention?

Ancillary programs allow employers to offer a broader range of benefits to their employees. Here’s how they can move the needle on your company culture goals: 

Decreasing turnover 

Not content with salary alone, employees will move jobs to find a benefits package that meets their needs. Marsh McLennan reports: 

• Employees with mental health and well-being challenges are four times more likely to seek a new role. 
• Better benefits are the second highest reason for switching jobs. 
• 1 in 3 employees would forego a pay increase if they could secure better benefits for their families. 
• 73% would be motivated to remain with their company if they received better health insurance. 

Improving employee satisfaction 

When employees feel supported via their ancillary coverage, they’re more likely to be satisfied with their jobs—especially if they have a variety to choose from. The same study reveals: 

• 82% of employees with 10 or more benefits say they are thriving compared to just 58% of employees with 1-4 benefits. 

Can employees choose their ancillary benefits independently of their core benefits?

Yes, employees often have the flexibility to choose ancillary benefits independently of core benefits like health insurance. Their beauty lies in creating a more personalized and meaningful benefits experience. 

Unlike standardized core plans, ancillary benefits allow employees to tailor their coverage to fit their unique needs. This customization empowers individuals to focus on what matters most to them, whether it’s mental health support, fertility benefits, or financial wellness tools.

Voluntary plans, in particular, let employees opt in without burdening the employer, providing affordable, payroll-deducted access to specialized coverage. This flexibility supports diverse lifestyles and enhances job satisfaction and employee retention. 

Offer an enticing range of ancillary benefits with Benepass

Benepass is a people-first platform that provides several ways to offer voluntary or employer-supported ancillary benefits to employees. For example: 

• Wellness benefits 
• Food benefits 
• Professional development benefits 
• Family and childcare benefits 
• Benepass Rewards and Recognition 
• Lifestyle Spending Accounts 
• Health benefits, including FSAs, HRAs, and HSAs

Benepass scores 4.8 out of 5 with the G2 user community and 9.7 out of 10 in each of the Ease of Use, Ease of Setup, and Quality of Support categories. 

Here’s how Shanda B., a Senior Director of Total Rewards & HR Operations for an enterprise company, describes her experience with our platform: 

“Since implementing Benepass, we’ve successfully streamlined multiple benefits into our program options. The implementation process was seamless, with the team providing support every step of the way. The platform’s intuitive and user-friendly design has been well-received by our employees, who frequently praise the exceptional customer support. Continuous system enhancements align perfectly with our forward-thinking culture, reinforcing our commitment to innovation and employee satisfaction.” 

Ready to support your employees with a full range of ancillary benefits? Take a free Benepass demo today or contact sales@getbenepass.com to connect with a benefits specialist. 

FAQs

What are ancillary benefits?

Ancillary benefits are non-core benefits that complement primary employee benefits like health insurance, adding extra value to the traditional benefits package. 

How do ancillary benefits affect employee retention?

Companies create a sense of care and commitment toward their workforce by offering ancillary benefits that cater to diverse preferences and life stages. Employees are more likely to remain with an organization that aligns with their personal and professional priorities, which, in turn, reduces the costs and disruptions associated with high turnover rates.

Can ancillary benefits be customized?

Yes, employees often have the option to choose from a range of ancillary benefits to tailor their package to personal preferences. Employers typically offer a menu of optional benefits for their employees to pick from. These include tailored health and wellness plans, financial advice sessions, or lifestyle benefits.

Why are dental and vision insurance considered ancillary benefits?

Dental and vision insurance are considered ancillary benefits because they extend the value of core benefits such as health insurance, providing additional support for specific healthcare needs. 

How do voluntary plans fit into ancillary benefits?

Voluntary plans allow employees to opt into additional benefits, offering further personalization and choice within their benefits package.