Ancillary benefits create added value for benefits brokers and small business owners alike. Benefits brokers who enhance their offerings portfolio with ancillary benefits position themselves as comprehensive solutions providers.
Small business owners who integrate ancillary products into their employee benefits packages gain a competitive edge in talent acquisition, improve employee satisfaction, increase their business’ value perception among employees, and help shield themselves from hidden risks.
A full-service broker offering can lead to high client retention, recognition for their expertise and versatility within the industry, and new revenue streams for commission earnings on new products and an uptick in client referrals.
This blog will provide an overview of ancillary benefits and how they can be used as a tool for brokers and SMB owners to grow their businesses. Benefits brokers will gain insight into how to help their small business owners understand the additional value that voluntary and ancillary benefits bring to their businesses.
Understanding Ancillary Benefits
A 2023 SHRM Employee Benefits Survey, it was reported how important health coverage is to employers, stating,
"98% of employers make healthcare coverage available to their employees, even among organizations that are not subject to the employer mandate under the Affordable Care Act (ACA)."
In addition, the survey showed that the most common health plans offered by employers are Preferred provider organization (PPO) plans (82%), with high-deductible health plans (HDHPs) linked to a health savings account, health reimbursement arrangement, or flexible spending accounts are quickly gaining in popularity as well.
For your small and medium-sized business clients to remain competitive in the recruitment space, they need to offer more than a basic benefits package. That’s where you come in.
By gaining a fuller understanding of the ancillary benefits your PEO partner offers and how to introduce them to your clients best, you can be the one who helps your SMB clients attract high-quality talent, increase their employee satisfaction and retention rates, and—when sold in partnership with your PEO—do it all with minimal work for you and your clients.
What are Voluntary and Ancillary Benefits?
The nuances throughout the landscape of employee benefits can be hard to distinguish. For instance, “voluntary benefits” and “ancillary benefits” are terms that people often use interchangeably and may not know that there can be a distinction between the two.
Ancillary benefits are offerings that complement core employee benefits as supplementary resources. They can be considered a secondary kind of health coverage. These can include plans for dental insurance, vision coverage, critical illness assistance, or even disability or life insurance. Generally, “ancillary benefits” is an umbrella term that indicates any additional offerings that enhance an employee’s overall wellness. Notably, ancillary products can be paid for with pre-tax dollars.
Voluntary benefits tend to be known as offerings available to employees that go beyond the standard benefits package. “Voluntary benefits” can include ancillary benefits as well as offerings that go even further, such as pet insurance, wellness programs, even employee stipends, legal counseling, or additional insurance to cover things like identity theft, mortgage protection, or travel.
Why are Ancillary Benefits Important?
Ensuring your portfolio is as diversified as possible with a wide range of ancillary and voluntary benefits will give you the resources you need to help your client customize a benefits package that caters to their unique needs.
Supplemental benefits can close the gaps left by standard health plan offerings and provide significant cost savings. Employers use ancillary products to fortify their core benefits and voluntary offerings to increase the appeal of their employee benefits packages and stand out in the labor market.
How Ancillary Benefits Add Value for Benefits Brokers
Employee benefits brokers and insurance agents who want to make an impression on current and potential clients should be selling ancillary and voluntary benefits along with their suite of core benefits. Partnering with the right PEO will result in access to enhanced offerings and give brokers a leg up on their competition.
Improved Client Relationships and Retention
Brokers facilitating comprehensive benefits solutions, including ancillary and voluntary benefits, foster stronger client relationships. Their ability to address a wide spectrum of needs enhances client satisfaction and loyalty.
Additional Revenue Opportunities
Your client’s business isn’t the only one that benefits from additional coverages. You can also build a healthier business when you sell voluntary and ancillary products. Successfully upselling additional products that complement main product lines, such as accident and hospital insurance and the core health plan, results in additional revenue streams.
Differentiation in the Industry
Added benefits are attractive to employers and employees, but many employers don’t yet know what ancillary benefits are. When you educate your clients about these offerings and low- or no-cost perks such as flexible work schedules or a casual dress code in the office, you position yourself as a thought leader and an expert in the field. This recognition elevates your standing and credibility among peers and clients alike.
Ancillary Benefits Add Value for Small and Medium-Sized Businesses
In addition to currently offering your clients your small group or PEO large group medical coverage, you can equip your client with a robust portfolio of voluntary and ancillary benefits that go beyond simple ROI. They are a cost-effective way to heighten employees’ value perception of your client’s company and make them more competitive in the job market.
Heightened Value Perception
51%of workers who own one or more supplemental health products hope to stay at their jobs for 10 or more years, according to the 12th Annual Guardian Workplace Benefits Study. The report found that the number of workers who hoped to stay with their company for 10 or more years dropped to only 33% for those who didn’t own any supplemental health products.
The value perception of ancillary benefits far exceeds their actual cost. Comprehensive coverage leads to higher employee satisfaction, deeper loyalty to the company, and higher retention rates. Mercer’s 2021 Health On Demand report found that the more diverse wellbeing resources your client offers their employees, the more productive and loyal their employees will feel.
Becoming More Competitive in the Job Market
You can help your SMB clients become more competitive in the job market simply by upselling ancillary and voluntary benefits.
An Employee Benefits Study from Fractl surveyed 2,000 people and found that 57% reported that benefits and perks were among their top considerations when deciding whether to join a company. 54% of respondents said better health, dental, and vision insurance would receive “heavy consideration” before making a decision.
Mastering these two critical distinctions leads to increased revenue streams, higher rates of client retention and loyalty, and recognition for their expertise and versatility within the industry.
Positioning Ancillary Benefits for Small and Medium-Size Business Owners
Experienced insurance agents and benefits brokers know how important it is to tailor employee benefits solutions to each client’s unique needs. To do this, they need to be prepared to effectively communicate the value proposition of additional products, especially to clients who don’t fully understand the value they bring.
Tailor the Conversation
The 12th Annual Guardian Workplace Benefits Study reported that only 28% of employees felt their employer does a good job of educating them about what benefits are available to them and how to use them. Meanwhile, only 32% of employers said that modifying employee communications and enrollment for their different employee segments is very or extremely important.
These findings reinforce how critical it is to not only educate your SMB clients about their benefits offerings, but to also ensure they understand that educational resources are available to them and to their employees.
The relationship an insurance agent or benefits broker facilitates between their SMB clients and their partnered PEO lifts the responsibility of employee education from the broker and the client.
Brokers who are partnered with a PEO, such as PrestigePEO, are provided with a bevy of informational material they can share with their clients. This means that brokers only need to have the conversations with their client, explain the benefits and their value, and then introduce their client to the PEO to handle the rest.
Once a client is connected to your PEO, the PEO takes over the time-consuming task of ensuring your client’s employees are well-educated about their benefits options. PrestigePEO is making it easier than ever for all your client’s managers and worksite employees to find, learn about, and consider all their benefit opportunities, in one place. Keep an eye out for the upcoming launch of the PrestigePEO Benefits Hub.
Emphasize Cost-Efficiency
As mentioned earlier in this article, employers who offer a wide range of ancillary and voluntary products experience a much higher return on investment (ROI) by including low-cost supplementary benefits.
PrestigePEO offers our broker partners line-item pricing for every benefit so you and your SMB client can discuss monetary costs and see the dollar savings they’ll get from your partnership with PrestigePEO. More than dollars and cents, it’s important to highlight how these benefits also provide an employee satisfaction ROI that translates into additional cost savings via employee productivity, retention, and even a more enriched recruitment strategy.
Focus on Customization
Voluntary benefits are inherently flexible. With these offerings, you can empower your client to customize their benefits packages to individual employee needs economically. Since your ultimate goal as a benefits broker is to help your clients solve problems, don’t forget to position voluntary and ancillary benefits as what they truly are—solutions to a myriad of issues small and medium-sized business owners deal with every day.
Dispelling Misconceptions Your SMB Clients May Have About Ancillary Benefits
Addressing misconceptions about ancillary and voluntary benefits is crucial for benefits brokers. By offering informed responses to misunderstandings like these, brokers can showcase the value and necessity of voluntary and ancillary benefits.
This is a perfect opportunity to highlight how these offerings enhance a benefits package, cater to diverse needs, and contribute significantly to employee satisfaction and business stability.
“Only big businesses can afford them”
While Fortune 500-level benefits were once exclusive to larger companies, the landscape has evolved. Brokers can highlight the flexibility of these offerings, tailored to fit various budgets and company sizes. By aggregating small businesses through PEOs or collective bargaining, even smaller enterprises gain access to cost-effective packages.
"My administrative staff is too overloaded to manage additional benefits.”
This statement is the perfect opportunity to open a conversation about how your PEO partner can significantly reduce the daily administrative burdens faced by your clients and their staff.
PrestigePEO streamlines benefits integration for you and your client and offers concierge-level support and services that free up the time you and your SMB clients need to focus on growing your businesses.
“We already have comprehensive health coverage and don’t need additional coverages.”
Clarify that while primary coverage is crucial, voluntary and ancillary benefits provide specialized coverage that fills niche gaps that core benefits don’t always include. Access to specific services such as dental, vision, critical illness, disability, and even life insurance are essentially non-negotiables for about 88% of workers.
What Happens Next?
As a PEO broker partner, all you have to do once your client says “yes” to including voluntary and ancillary offerings in their benefits packages is introduce your client to your PEO partner. From there, your PEO partner will do the heavy lifting for you and your client.
First, the PEO will conduct an analysis of your client’s benefits structure to confirm which voluntary and ancillary benefits will most effectively serve to close coverage gaps and add appeal to your client’s benefits offerings.
Next, they will work with your client to conduct information sessions, workshops, or webinars to ensure business owners and their employees understand the importance and advantages of supplemental benefits.
The PEO will work with the broker and their client to complete enrollment and ensure the seamless integration of voluntary and ancillary benefits into the client’s employee benefits offerings.
Optimize Your Offerings with PrestigePEO
When you partner with PrestigePEO, you can look forward to payouts on administrative fees and individual products—including core, ancillary, and voluntary benefits—for the lifespan of the client relationship.
We provide reliable products and services to our partners and their clients to ensure they are well-positioned for success.
Personalized service
While other PEOs tend to gravitate toward chatbots and outsource their customer service to call centers, our brokers and their clients are introduced to a dedicated, in-house point of contact. When our partners or their clients have a question, they reach a human every time.
Price transparency
We deliver Fortune 500-level benefits at significantly lower rates than SMB clients can access on their own. Our broker partners receive line-item pricing for each benefit so they can help their clients build customized benefits packages and show them exactly where their total savings come from.
Broker Differentiation
In partnership with PrestigePEO, brokers can offer their clients competitive rates on high-value benefits year after year with consistently low single-digit renewal rates. Additionally, they can offer their clients comprehensive HR administration and other key services that allow small business owners to focus on the success of their company.
We work diligently to exemplify our dedication to industry excellence and provide high-value opportunities for our partners, including a stable client base, enhanced earning potential, and expert support from a dedicated team of professionals who are ready to support brokers and their clients with day-to-day business operations.
Leveraging our expertise is a strategic advantage for industry professionals at all levels of experience. We offer both you and your clients comprehensive support from our in-house specialists. This eliminates the time-consuming process of navigating call centers and dealing with chatbots, instead allowing you and your clients to concentrate on core competencies.
With over 25 years of experience, PrestigePEO boasts a team of seasoned professionals who are well-versed in the world of employee benefits. Our team stays ahead of regulatory changes, which ensures your clients’ benefit plans remain compliant and competitive.
We work closely with our partners to develop customized and transparent benefit solutions that align with your clients’ workforces and financial needs in mind.
Brokers who want to learn more about The PrestigePEO Difference or are interested in partnering with us can visit www.prestigepeo.com/for-brokers, contact us directly by phone at 888-PEO-PEO1, or via email at brokerpartner@prestigepeo.com.
