Choice Stories

May 20, 2022

Supplemental Insurance Benefits and the Value of Offering Them to Employees

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:

  • Aetna
  • 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
  • UnitedHealthcare
  • 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.

Your Beginner's Guide to Choosing a Small Business Employee Benefits Program

Do you need help choosing the right health benefits for your employees?
This guide can help!