Where, when and how you work has probably changed this year — and it may never be the same as before. One thing hasn’t changed: the importance of your employee benefits. The benefits you choose during annual enrollment at your company is one of the most important financial decisions you’ll make in a year.
If your company is like most, it’s concerned about offering benefits you need to protect you and your family physically, emotionally and financially. Nine in 10 employers in a recent survey* say they have no plans to eliminate or reduce employer-paid insurance benefits to reduce employment costs. In fact, some employers in the same study say they plan to boost coverage to be more comprehensive, increasing benefit options or adding telehealth coverage.
Before it’s time to enroll in workplace benefits, it’s important to understand your needs and the different types of coverage available to meet them. This is especially true for employee-paid coverage that supplements what your employer may already provide. Supplemental benefits are additional coverage beyond your health insurance that you can choose and usually pay for through payroll deduction.
Supplemental benefits add more coverage and financial protection
Supplemental benefits allow you to customize your benefits package with the types of coverage most important to you and your family. Because you sign up for them at work, it’s usually more affordable than coverage you could buy on your own. It’s also easier to qualify for coverage as part of a workplace group, often without answering any health questions.
The major types include:
- Life insurance is financial protection for your family should anything happen to you. It can help your loved ones pay living expenses, debts, medical bills, and funeral costs, in addition to future needs such as college tuition or retirement. Even if your employer provides a base level of life insurance, it may not be enough for your family’s long-term needs.
- Disability insurance is designed to pay a portion of your income if you’re sick or injured and unable to work. It can be offered as short-term coverage — typically three to six months — or long-term coverage that can last several years or until retirement.
- Dental insurance helps reduce out-of-pocket costs for most common dental procedures, like cleanings, fillings, crowns, dentures, oral surgery, orthodontia and other treatments. It’s an important component of overall wellness and prevention for your health.
- Vision insurance helps cover the costs of exams, glasses and contact lenses, and may include access to discounted materials and services through a network of vision service providers.
- Accident insurance offers a lump sum financial benefit if you have an accident or injury that helps pay out-of-pocket expenses such as doctor bills, co-pays or emergency room fees.
- Hospital insurance helps you pay the costs of hospital stays, and on some plans, outpatient surgery and diagnostic procedures.
- Critical illness insurance provides a lump sum financial benefit when you’re diagnosed with a wide range of serious conditions, such as heart attack, stroke, cancer, organ failure, Alzheimer’s disease, ALS and more. Reoccurrence benefits are usually standard, meaning you’re still covered if the same illness strikes again.
- Cancer insurance provides more specific coverage for the often-overwhelming costs of treating cancer, from initial diagnosis through recovery. It can also pay additional benefits for a variety of treatments and services, such as ambulance transportation, hospital confinement, radiation and chemotherapy, medications and surgery.
Why you might need supplemental benefits
There’s no replacement for major medical insurance in the workplace. It’s the most highly valued and most commonly offered employee insurance benefit. Even the best medical insurance likely won’t cover all of your out-of-pocket costs for even minor illnesses and injuries, especially with today’s high-deductible health plans. The average health care deductible for single coverage was nearly $1,500 last year and almost double for family coverage. Add in co-pays, coinsurance and other noncovered costs, and an average family has more than $4,700 in out-of-pocket medical costs each year — and that’s not counting the cost of health insurance premiums.
At the same time, most workers don’t have a financial cushion to fall back on. Only 40% would use savings to pay an unexpected $1,000 expense, such as a car repair or emergency room visit. Not surprising, then, that two-thirds of all bankruptcies are tied to medical issues.
Supplemental benefits can help bridge this financial gap. You can use your benefits for uncovered medical costs such as deductibles and copayments, or nonmedical expenses such as travel for treatment or child care during recovery. These benefits provide valuable coverage for many of life’s common — but unexpected — health events, such as accidents and illness.
And here’s another benefit of some supplemental coverage: You don’t have to be sick or injured to take advantage of it. Many plans include a wellness benefit that can pay a set amount when you have a preventive screening or diagnostic test such as a cholesterol test, Pap smear, or colonoscopy.
* Survey of 287 U.S. companies by DYNATA on behalf of Colonial Life and Unum, April 21–24, 2020.