Ancillary Benefits Viewed as a Differentiator Among Employers

Access to voluntary and other ancillary or nontraditional benefits provided through the workplace varies greatly according to employer size, region and industry, highlighting the importance of using local benchmarking data in benefits planning, a new study finds.

Preliminary results from the 2013 Ancillary Products Studyby United Benefits Advisors (UBA), with responses from nearly 12,000 U.S. employers, also indicate that these benefits are increasingly viewed by job candidates and employees as a differentiator among employers.

The UBA survey found that large employees were far more likely to provide access to ancillary benefits. For example, only 0.5 percent of all employers offered onsite health clinics. However among employers with more than 500 employees, the average was 7.4 percent. Voluntary benefits such as pet insurance revealed similar differences: 8 percent of employers with 1,000-plus employees offer this benefit, but less than .5 percent of employers with fewer than 200 employees included it in their benefits packages.

Typically, voluntary benefits premiums are paid by employees through salary deferral, often at group rates that their employer negotiates.

“With more flexibility to offer attractive benefits like dental, life, long-term disability and paid-time off, employers are increasingly adding these product lines, at little or no cost, to attract and retain top talent,” said Thom Mangan, UBA CEO. “But the first step in crafting an employee benefits package with ancillary choices is knowing what others in your industry or area are offering. Benchmarking allows employers to make the best choices when selecting ancillary products that will keep and attract superior employees.”

Among other survey findings:

• Nearly three-quarters of all employers who responded offer dental coverage, with almost all large organizations providing the benefit.
  
• A regional breakdown showed that membership discounts are most popular in the Northeast, where more than 5 percent of employers offer this benefit to individuals, compared with less than 2 percent in the central part of the U.S.
  
• Ninety-five percent of businesses with over 500 employees offer group-term life insurance, but only 56 percent with fewer than 50 employees do so.
  
• An industry breakdown of short-term disability coverage reveals that 37 percent of employers in all major industries offer this coverage.
  
• Employers in the construction, agriculture and mining industries offer long-term disability insurance much less often (31 percent) than the national average (45.9 percent), despite the high physical risks associated with these industries.
  
• As for critical illness insurance, just 7.9 percent of all employers provide this benefit while 3 percent offer long-term-care insurance, much lower averages than among large employers.

“As health care exchanges go online as a result of health care reform and fewer businesses are burdened with a full health care plan, we anticipate that interest in ancillary products will continue to grow,” said Mangan.

Stephen Miller, CEBS, is an online editor/manager for SHRM.