Should Supplemental Benefits Be Part of Your Benefits Package?

Should supplemental benefits be part of your benefits package? Some would answer that question as, “it depends on whether your organization is a for profit or a non-profit.” Let’s first level-set what I am referring to as “supplemental benefits”.

For the purposes of this conversation, I am referring to the types of programs that are 100% employee paid and put dollars back into employee’s pockets that were spent on accidents or illnesses. But wait…isn’t that what health insurance is for? The short answer is no. Health insurance covers specific medical expenses; however, anyone who has had to leave work to take a loved one to the emergency room knows that there are costs that insurance does not pay for. Those costs include copays for the visit to the ER as well as follow-up care, the cost of lost wages, parking at the hospital, and sometimes even child care if the child cannot return to school. This is where supplemental benefits such as *Aflac come in. Aflac in particular, stakes their value proposition on being able to put those indirect costs back into the pockets of employees so that even if an employee or dependent’s health changes, their lifestyle won’t suffer.

So what about the argument that these programs are likely better for organizations with higher incomes vs those with lower incomes? There certainly is a case to be made for what people will value if their income has little margin, but there is also data that suggests that both non-profit and for profit organizations share a common denominator. Both types of organizations are faced with rising healthcare costs and both are dealing with them in the same way- they offer high deductible health plans. In 2016, these programs had a single deductible of $1300/year and $2,600/year for those enrolled with dependents. These deductibles cause unexpected financial challenges for employees on varying levels (Kaiser Family Foundation, 2017). According to Forbes (2016), “they don’t have enough savings to cover a $500 emergency.”

So yes, supplemental does come with a new payroll deduction for your employees, and yes, not everyone purchasing these programs, which could be described as safety nets, will ever use them. That said, if your employees did ever need a financial safety net due to an unexpected medical issue, you will be glad that you made the decision to at least offer the programs to them versus hoping that your medical insurance was enough.

*There are a number of supplemental companies on the market ((Colonial, Allstate, Trans America, etc) . For the sake of simplicity, this article refers to Aflac.

Sources Cited:

Forbes: https://www.forbes.com/sites/maggiemcgrath/2016/01/06/63-of-americans-dont-have-enough-savings-to-cover-a-500-emergency/#80772b4e0d97

Kaiser Family Foundaion: http://kaiserfamilyfoundation.files.wordpress.com/2014/01/8537-figure-3.png