Ancillary benefits
Ancillary benefit is a secondary benefit which is obtained as an addition to primary benefit, without additional work or expense. The ancillary benefits are most popular term in group health insurance. The company can offer ancillary benefit to employees, which consists of e.g. dental of vision insurance. It's a kind of preventive care, not only acting when problems occur.
75% of employees complain that they have no influence on the choice of non-wage benefits. Employers usually make their own decisions about benefits granted to individuals. This approach is wrong. When creating an incentive system, the needs of employees should be taken into account, so talk to them about non-pay benefits that would interest them. Thanks to a reliable diagnosis of the expectations of employed persons, it is possible to identify benefits that will have a real impact on employee motivation.
It is also worth making the receiving of further benefits from the workplace conditional. If the manager has the same rich package of non-salary supplements, as the assistant president, the benefits will cease to fulfill their motivational function.
Competition analysis is necessary. People working in a given industry often review the benefits that individual employers have to offer. If it turns out that you can get a richer add-on package at company X, the employee will certainly try to hire a company. However, you can not get crazy and imitate your rivals in everything. A reliable diagnosis of needs allows you to offer benefits that will attract and effectively motivate the best specialists in a given industry.
Types of benefits
Types of benefits in the company:
- Basic medical care
- Sports activities (gym, swimming pool, fitness)
- A business telephone for private use
- A business computer for private use
- Integration events
- Training, vocational courses
- Life insurance (private or group)
- Language training
- Flexible working time
- Remote work
- Reimbursement for travel
- Co-financing for holidays
- Meals for employees
- Additional free for parents
- Supporting volunteering on free days
- A room to rest in the office
Importance
That can be beneficial to company in several ways:
- motivates employees to better work,
- helps early find more costly problems with health and solve them quicker and cheaper,
- company is viewed as better emmployer.
- decreasing number of days when employees are out of work due to their health
Disadvantages:
- their attractiveness to employees requires relatively high wages in the enterprise
- substantial difficulties related to its development and implementation
- convincing employees about the attractiveness of material benefits instead of cash
- high administrative costs for small enterprises
In Western Europe and in the United States, benefits are one of the most important elements of employee motivation. They are also one of the most interesting elements to encourage employees to work in companies that use and offer benefits to their employees (and their families). In some companies, benefits are an alternative to low wage increases, and the choice: benefit or increase is for employees.
Allowance
Part of remuneration for work provided in kind in addition to and independently of remuneration for work. Currently, the deputies play a marginal role and are only used in some industries, such as mining. The legal basis for granting a deputy is usually collective labor agreements. Part of the remuneration paid in the form of a deputatum can not be replaced by a one-off financial equivalent.
Benefits differ from deputies in that they are non-payment benefits offered by the employer in addition to basic pay for work. Benefits do not reduce the financial amount of remuneration, but are an additional element serving the employee. The amount of remuneration paid to the employee is not reduced even when the employer decides to finance additional employee benefits. Benefits in Poland are used by employers as incentive tools.
Examples of Ancillary benefits
- Dental Insurance: Dental insurance covers most of the cost of preventive and restorative care, including cleanings, x-rays, fillings, bridges, and crowns.
- Vision Insurance: Vision insurance helps cover the cost of an annual eye exam, as well as the cost of lenses and frames.
- Disability Insurance: Disability insurance provides financial protection if you are unable to work due to an accident or illness.
- Life Insurance: Life insurance provides financial security to your family in the event of your death.
- Accidental Death and Dismemberment Insurance: AD&D insurance provides financial protection in the event of the death or dismemberment of the insured.
- Long-Term Care Insurance: Long-term care insurance helps cover the cost of long-term care services, such as home health care, assisted living, and nursing home care.
- Flexible Spending Accounts: Flexible spending accounts allow employees to set aside pre-tax money to pay for out-of-pocket medical expenses, such as copays and deductibles.
- Retirement Plans: Retirement plans, such as 401(k) plans, allow employees to save for retirement on a tax-deferred basis.
- Health Savings Accounts: Health savings accounts allow employees to set aside pre-tax money to pay for out-of-pocket medical expenses, such as copays and deductibles.
- Commuter Benefits: Commuter benefits allow employees to set aside pre-tax money to pay for public transportation or parking expenses.
Limitations of Ancillary benefits
Ancillary benefits come with certain limitations that should be taken into account before enrolling in them. These limitations include:
- Cost: Many ancillary benefits come with a hefty price tag. Not having the funds to cover them should be taken into consideration when deciding whether or not to opt in.
- Limited Coverage: Ancillary benefits may not cover certain conditions. This means patients may be subject to out-of-pocket costs for treatments that are not included in the plan.
- Lack of Flexibility: Ancillary benefits usually have a set list of services that are covered and excluded. This can limit the flexibility of the coverage and provide less options for care.
- Limited Network: Ancillary benefits may only be accepted by a limited number of providers in a certain network. This could limit the options for care and cause inconvenience.
- Time-consuming Claims Process: Claims can be time-consuming and complicated to submit. This could delay the reimbursement of costs or result in a denial.
Ancillary benefits are associated with many other approaches and strategies, in order to provide employees with a comprehensive package of benefits. These include:
- Flexible benefits - this involves providing employees with the option to choose their own benefits package, usually comprising of core and additional benefits. This allows employees to tailor their benefits to their individual needs and circumstances.
- Voluntary benefits - these are benefits which are offered in addition to an employer's core benefits package, but for which employees must pay their own contributions. These can include dental and vision insurance, health savings accounts, and other medical coverage.
- Health savings accounts - these are special accounts that employees can use to save for medical expenses. Contributions to the account are tax-free, and withdrawals are tax-free as long as they are used for qualified medical expenses.
- Wellness programs - these are programs which are designed to help employees stay healthy and reduce their healthcare costs. Examples include health screenings, nutrition counseling, and access to fitness centers.
Ancillary benefits are an important component of an employee benefits package, as they provide employees with the opportunity to obtain additional protection and support in the event of a medical emergency. These benefits can be tailored to the individual needs and circumstances of the employee, providing them with a comprehensive package of benefits that can help them manage their healthcare costs and maintain their health and wellbeing.
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References
- Burtraw D., Krupnick A., Palmer K., Paul A., Toman M., Bloyd C. (1999). Ancillary Benefits of Reduced Air Pollution in the U.S. from Moderate Greenhouse Gas Mitigation Policies in the Electricity Sector. Discussion Paper 99-51, 5-11.
- Groosman B., Muller N., O’Neill E. (2009). The Ancillary Benefits from Climate Policy in the United States. middlebury College economics discussion paper, no. 0920, 2-5.
- Markandya, Anil; Rübbelke, Dirk T.G., (2003). Ancillary Benefits of Climate Policy. Nota di Lavoro, No. 105, 2-120.
- Van Vuuren, D. P., Cofala, J., Eerens, H. E., Oostenrijk, R., Heyes, C., Klimont, Z.,... & Amann, M. (2006). Exploring the ancillary benefits of the Kyoto Protocol for air pollution in Europe. Energy Policy, 34(4), 444-460.
Author: Natalia Wróblewska
