Group Ancillary Coverage Plans

Possibly the single most important benefit after health insurance is a disability plan. If an employee is out sick for 1-2 months, while you may want to continue to pay them, if they are out of PTO, you cannot afford to do so. This benefit will pay them after an elimination period of 7-14 days. It will provide up to $1,000-$1,500 a week for 12-13 weeks or longer, ensuring that in the short run, the employee can continue to pay their bills while they recover from the injury or illness that took them off the job. If the illness or injury persists beyond the scope of the short-term policy, long-term disability (LTD) kicks in, providing the employee upwards of $6,000-$10,000 a month for the next 5 years or until they reach the social security normal retirement age (SSNRA). This ensures that the employee is never at a loss for income if they are disabled. It's important to note that the payment is capped at 60% of weekly or monthly income. For instance, if I make $1,000 a week, my short-term disability (STD) payment would be $600. If I earn $5,000 a month, my LTD payment would be $3,000 a month. Whether this is an employer-paid benefit or an employee paid benefit it can have tax implications; if it is employer-paid, the benefit is taxable income to the employee, whereas if it is employee-paid, it is tax-free to them. The cost of this benefit is tied to the payroll of the company and varies based on the risks to the carrier, impacting the premium costs. Some employers may choose to cover the long-term disability as it tends to be much less expensive, while allowing employees the option to opt into short-term benefits.

Life insurance is a cost-effective benefit to provide to employees and can complement other group offerings. It can be provided to the employee as an employer-paid benefit or as a voluntary benefit. Alternatively, it can be structured as a joint venture, where the employer pays for 1X salary and the employee is allowed to purchase up to 5X that amount on their own. For employees with health conditions that may make it challenging for them to secure coverage independently, this benefit is particularly valuable. The cost of life insurance depends on the age of the employees and the volume of benefit being purchased, making it a generally low-cost option compared to fully insured plans or self-funded insurance.

Supplemental coverages include accident, cancer, critical illness, hospitalization, GAP, and similar policies. Most of these policies pay out when an event occurs. For example, if Kevin falls and breaks his leg and he has an accident policy, he will receive a payout. The accident policy may cover $2,000 for the broken leg, $500 for an emergency room visit, $100 for x-rays, and $50 for each physical therapy and office visit related to the injury. This coverage can help offset the deductible of fully insured plans and may provide additional funds depending on the medical policy. Importantly, the accident policy will pay you directly, regardless of what your group health insurance covers. Each policy has a defined schedule of payments tied to specific events, ensuring that you receive cash benefits when needed. Additionally, when considering options like group dental plans or group vision insurance, it's essential to evaluate how these supplemental coverages fit into your overall health strategy, whether you are using self-funded insurance or fully insured plans.