According to a 2020 survey by the International Foundation of Employee Benefit Plans, a majority of employers (87%) offered at least one voluntary, supplemental insurance product to their workers that year. This was up two percent from 2018. Among smaller organizations, the percentage was slightly lower, 76%, while nearly all (96%) of employers with 500 or more employees offered at least one voluntary benefit.
What Is Supplemental Insurance?
The recent pandemic has increased interest in supplemental and voluntary benefits. This includes products beyond employees’ traditional Major Medical insurance coverage. Dental, Vision, Life, and supplemental health insurance (i.e., Hospital Indemnity, Accident, and Critical Illness) fit in this group.
According to a 2022 report by Aon, the availability of these benefits through employers increased 41% between 2021 and 2022.
In a competitive talent market, offering the right combination of benefits to your employees can help you differentiate your business. It can help you attract new employees and retain your top performers.
Preferred Employee Benefits
So, what are employees’ most-preferred benefits? As you might expect, health insurance is the most popular. Eighty-five percent of employees say health insurance is a “must have.” Another 10% say it’s a “nice to have” benefit. Only four percent of employees responding in the MetLife 19th Annual U.S. Employee Benefit Trends Study say health insurance is not needed.
In a different survey by WTW (formerly Willis Towers Watson), 46% of workers said they would forego added pay for a more generous health plan. That figure is up from 36% just two years ago, according to an article published by the Society for Human Resource Management (SHRM).
As far as supplemental and voluntary benefits go, according to MetLife, the most-popular products include:
- Dental Insurance – viewed as a “must have” by 71% of employees and a “nice to have” by another 25% of employees
- Vision Insurance – considered a must have by 70% of employees and a nice to have by another 25% of employees
- Life Insurance – viewed a must have by 61% of employees and a nice to have by another 30% of employees
- Disability Insurance – considered a must-have or a nice to have benefit by 90% of employees
- Critical Illness – viewed by 44% of employees as a must have and a nice to have by another 43%
- Accident Insurance – viewed favorably by 87% (42% as a must-have and 45% as a nice-to-have benefit; 13% said it is not needed
- Hospital Indemnity – considered a must-have benefit by 38% and a nice to have benefit by 45%
- Cancer Insurance – viewed as a must-have benefit by more than one-third (35%) and a nice-to-have benefit by nearly half (47%)
Looking at participation rates, Aon reports significant jumps in employee participation in the past two years. Critical Illness was up 11% in 2022, while Accident Insurance was up 10%. Hospital Indemnity was up 6%. Permanent Life was up five percent. Short Term Disability was down slightly.
How Do Supplemental Insurance Plans Work?
As the name suggests, supplemental health plans are designed to complement employees’ primary coverage like Major Medical. Some plans offer specific payments related to treatment following an accident. Other plans offer direct payments to the insured to help offset costs related to a hospital stay or specific condition diagnosis. Benefits are payable in addition to those paid by a health plan.
Where to Find Coverage
Many health insurers and health plans writing Group Health Insurance coverage in California also offer supplemental and voluntary coverage. Among others are these:
- Anthem Blue Cross
- Blue Shield of California
- CaliforniaChoice (the multi-carrier private exchange)
- Cigna/Cigna + Oscar
- Health Net
- Kaiser Permanente
- MediExcel Health Plan (cross-border coverage)
- Sharp Health Plan
- Sutter Health Plus
- Western Health Advantage
Other carriers and administrators are singularly focused, such as Delta Dental, LIBERTY Dental, and VSP® (formerly Vision Service Plan). The ChoiceBuilder ancillary benefits exchange offers Dental, Vision, Life, and Chiropractic Care (or Chiro and Acupuncture). Ameritas offers both Dental and Vision in California. MetLife offers a range of ancillary coverage, including Dental, Life, Vision, and Disability.
What are the Advantages of Offering Supplemental Health
Employers often choose to make voluntary and supplemental products available to employees so they can tailor coverage to their specific needs. It gives employees the ability to ensure they are protected against costs they would otherwise have to pay out of pocket, including deductibles, copays, and coinsurance. Again, offering voluntary and supplemental benefits can also help you set yourself apart from other businesses in employee recruitment.
How to Learn More
If you’re ready to learn more about available supplemental options, a great place to start is to talk with your employee benefits broker. A broker will be able to discuss employer-sponsored and voluntary coverage available in your area.
If you do not already have a broker, you can search for one here.
There are many reasons to choose CaliforniaChoice for your small business. The program includes eight premier health plans and gives your employees the freedom to choose the one that’s right for them. You have the power to control your costs through Defined Contribution. Beyond that, CaliforniaChoice offers the greatest access to doctors, specialists, and hospitals in the state.
Did you know CaliforniaChoice isn’t just an ideal health care solution for your business? It also provides access to other benefits, like Dental, Vision, Chiropractic, and Life Insurance.
Group Dental Coverage
With CaliforniaChoice, you can choose from a discounted Dental service program, two Dental HMOs, and four Dental PPOs. Dentegra® Smile Club is included at no additional cost. It’s one of the many value-added benefits in the CaliforniaChoice Member Value Suite.
Members can also take advantage of reduced fees on hundreds of dental procedures. Plus, they can access a network with thousands of participating dentists in California.
Perhaps best of all, there are no claim forms or other paperwork. There are no waiting periods. Your employees can enjoy immediate savings after joining the program.
Two low-cost SmileSaverSM plans are available: Dental 3000 HMO and Dental 1000 HMO. These plans offer free office visits, oral exams, X-rays, and two cleanings per year. Oral surgery, restorative, endodontics, periodontics, crowns, and prosthodontics are available with co-pays. Orthodontics is available, too.
Either plan can be added as a voluntary option with no minimum employee participation. Members are required to live in the participating dentist’s service area. You can view the SmileSaver Online Provider Directory through a link at CalChoice.com or by visiting the MetLife website.
Four Ameritas® PPO plans are available: PPO 3000, PPO 3500, PPO 4000, and PPPO 5000. A range of different in- and out-of-network annual maximums and deductibles is available.
All four Dental PPO plans include core services. That includes Preventive, Basic, Major, and Endo/Perio benefits. Different benefit levels apply for in- and out-of-network services.
A Waiting Period applies to Major Services for groups of 10 or fewer employees. It also applies to those without 12 months of uninterrupted Dental coverage under a prior plan. A 24-month Waiting Period applies for Orthodontia under the Ameritas PPO 3500, 4000, and 5000 plans. (Ortho is not part of PPO 3000.)
Besides outstanding Dental benefits, PPO 3500, PPO 4000, and PPO 5000 enrollees get access to Dental Rewards® by Ameritas. Members who visit a dentist and use only a portion of their annual maximum benefit in a year are rewarded with additional benefits the following year.
Ameritas PPO coverage is also available as Voluntary, with the full premium paid by employees. For complete plan information, view the Ameritas PDF summary at CalChoice.com.
Dental Health Benefits Matter to Employees
A comprehensive employee benefits package can help you set your business apart. That’s especially important in today’s competitive talent market. To learn more about your options from CaliforniaChoice, talk with your broker. If you don’t already have a broker, we can help you search for one.
Contrary to what you might expect, using a broker won’t cost you more. It could save you and your business money. That’s because a broker will help you find coverage your employees will appreciate, while helping you stay within your budget.
If you’re shopping for Group Health Insurance for your employees, you’re likely wondering what you can expect to spend. You’re not alone and the answer isn’t a simple one. That’s why we’re taking a closer look at the cost of Group Health Insurance and the factors that influence it.
Your Group Health Insurance Cost Depends On:
- Your group size: Are you a Small Group or a Large Group? In California, “Small Group” applies to any employer-sponsored plan for groups with up to 100 employees. Large Groups in California have 101 or more employees. If your group is small, you’ll pay “table rates” for your employees based on their ages. If your group is large, your rates are negotiable and are based on your group’s claims experience as well as demographics.
- Your coverage preference: The plan (or plans) you select for your employees are available at different price points. HMO (Health Maintenance Organization) plans are generally the least expensive. PPO (Preferred Provider Organization) plans offer increased flexibility, which can come with additional costs. The lesser know EPO (Exclusive Provider Organization) plans are a hybrid model that combines the best of both worlds – increased flexibility without high-cost premiums. Added benefits, such as Dental or Vision, affect costs, too.
Some plans – like the CaliforniaChoice private multi-carrier, employee-choice exchange – offer added benefits like Dental, Vision, Chiropractic (with or without Acupuncture), and Life Insurance. Other benefits, such as discounted services, fitness and wellness, and more may be available at no added cost.
- Ages of employees: Health insurers still consider the age of each participant (employees and dependents). The employer’s ZIP Code also drives the cost, even if employees live in other ZIP Codes.
- Your contribution: With CaliforniaChoice, you decide how much you want to put toward your employees’ premiums. You can choose a Fixed Percentage (50% to 100%) of a specific plan or a Fixed Dollar Amount for each employee. (The amount has to be the same for all employees.)
- Network and Metal Tier choices: Other factors affecting costs are your choice of provider network and the ACA Metal Tier for your plan(s). You can choose from full and limited networks. That determines employees’ access to doctors, specialists, and hospitals. Four metal tiers are available in the employer-sponsored marketplace. They are Bronze, Silver, Gold, and Platinum. Each aligns with the benefits offered by plans in that tier, according to its actuarial value, which is the percentage of total costs for covered benefits.
The higher the metal tier, the higher the percentage paid by the plan for in-network-covered services. For example, a Bronze plan pays 60% for in-network covered services, with the employee paying the remaining 40%. A Silver plan pays 70%, with covered insureds paying 30%. A Gold plan pays 80% for in-network covered services, with insureds paying 20%. A Platinum plan pays 90% toward covered services, in-network, while the insured pays 10%. Depending on your plan and carrier selection, you may be able to offer employees a single ACA tier, multiple tiers, or all four tiers.
“De-Minimis” variations: Federal law allows states to broaden or reduce the federal ACA standard for actuarial values within metal tiers. While changed several times over the years, current law allows states to enhance or reduce a plan’s actuarial value within each metal tier by -4/+2%. For example, this means a Gold plan could have a 76% to 82% actuarial value instead of the standard 80%. Each plan varies.
Average Group Health Insurance Costs
According to the Kaiser Family Foundation (KFF) 2021 Employer Health Benefits Survey, nationally the average annual premium was:
- $7,739 for Single coverage and $22,221 for Family coverage.
- For Single coverage, the employer’s contribution was 83% of the total cost ($6,440), versus 72% ($16.253) for Family coverage.
- Premiums at small and large firms were comparable in 2021. They were $7,813 at small firms as compared to $7,709 at large firms for Single coverage.
- The numbers were $21,804 versus $22,389 at large groups for Family coverage.
Workers at small firms, on average, contribute a larger percentage for Family coverage than those at bigger firms, 24% as compared to 37%.
As you might expect, premiums for an HDHP (High Deductible Health Plan) with a savings option were the lowest. PPO premiums were on the higher side.
Nearly a third (29%) of covered employees at smaller firms enjoy the benefit of their employers paying the entire premium for Single coverage. That contrasts with just five percent of employees at larger firms.
For those employees with Family coverage, nearly one-third (31%) at small firms must contribute more than half of their Family coverage premium. That compares to just five percent of covered employees at large firms.
Based on plan type, the average employee and employer contributions for Single and Family coverage for 2021 were as follows:
KFF found PPOs attracted nearly half (46%) of insured employees in 2021. More than one-quarter (28%) enrolled in HDHPs with a saving option. Sixteen percent chose an HMO, nine percent enrolled in a Point of Service (POS) plan, and one percent chose an indemnity plan. This breakdown is similar to 2020 enrollments.
Self-Funded and Level-Funded Plans
Many firms, especially larger firms, choose to self-fund employee health coverage. KFF found nearly two-thirds (64%) of workers enrolled in self-funded plans. That includes 21% of covered employees at small firms and 82% covered at larger firms. Again, these numbers are similar to 2020.
Deductibles and Cost-Sharing
Eighty-five percent of covered workers have an annual deductible that must be paid before many services are covered under their health plan. The average deductible is $1,669 for Single coverage (across all plan types), with some variance for group size. At small firms, the average is $2,379 as compared to $1,397 at larger firms. The average Single plan deductible was up 13% in 2021, when compared to the prior five years – and up 68% over the last 10 years.
Copays also apply for most covered workers. These are due when visiting a doctor, being admitted to the hospital, or having outpatient surgery. Average copayments in 2021 were $25 for primary care and $42 for specialty care. The coinsurance amount for primary care was 19%, 20% for specialty care.
Nearly two-thirds (59%) of employers offered benefits in 2021 to at least some workers, although it varied by firm size. Among those with three to nine workers, less than half (49%) offered health coverage. In contrast, virtually all employers with 1,000 or more workers offer health coverage to at least some workers. KFF says that among employers that offered health coverage in 2021, 77% of employees choose to enroll.
Find Coverage for Your Group
If you’re interested in comparing options for your employees, the best place to start is with a broker. Your broker can discuss the plans and coverage options available in your area. If you don’t already have an employee benefits broker, you can get a quote from one of our CalChoice preferred brokers today.