Guest Blogger: Ancillary Benefits Make Sense…And Dollars, Too

Many brokers who offer employee benefits as part of their practice or who desire to do so may focus entirely on health insurance and ignore ancillary benefits (dental, vision, LTD, STD, worksite, etc.), or only offer the additional benefits provided by the health care carrier. Brokers may feel that they are too complicated or offer little interest—or require too much additional effort.

In most cases, these benefits are actually easier to understand, less effected by legal, political or compliance changes, are more stable based on longer rate guarantees and can be offered on a voluntary basis which gives the employer flexibility. Three major reasons for adding ancillary benefits are:

1. They make your benefit plan offerings more comprehensive which makes them more valuable to the employees and you more valuable to the employer as a resource.  Most of these benefits are not available to individuals but only through group offerings at their employers. Also, when properly installed with a Section 125 Cafeteria Plan, they are less expensive to buy due to the pre-tax savings. They will also increase participation as employees who have health insurance elsewhere (i.e. spouse, etc.) will often purchase these benefits.
2. Ancillary benefits will help insulate you from competition as competitors have fewer doors to open.  The opposite is also true as I have gotten in the door with clients through ancillary benefits and later was able to take over the entire program.
3. The increased participation will enhance your compensation significantly as these benefits are popular and usually stay on the books for years to come.

Lastly, in order to reduce the complexity and work required to add ancillary benefits to your practice, I recommend that you develop relationships with a few top tier providers, like Solstice Benefits, which will provide comprehensive product lines and superior service in your area.

David Schwab is an employee benefits broker from South Florida.