How to Offer Supplemental Health Benefits to Employees

As a small business employer, benefits are often a top priority. The Justworks Bene-Fit Report with Harris Poll found that 52% of small business decision-makers worry at least quarterly that their current health benefits may not fully meet employees' needs, and 49% are concerned benefits could make it harder to hire or retain talent. 

When an employee breaks a bone, their health insurance covers part of the cost of care, but things like deductibles and ongoing personal expenses aren’t covered. Supplemental health benefits enable employers to fill financial gaps that a typical employee health insurance plan may not cover. This means they strengthen your overall employee benefits package without padding out your health insurance budget.

If you're exploring how to offer health benefits to employees beyond medical, dental, and vision, here's what it takes to get supplemental coverage in place for your team, at no added cost to your business.

What Are Supplemental Health Benefits

Supplemental health benefits are a category of voluntary benefits that pay employees cash directly when a covered event happens. The three most common types are:

• Accident Insurance: for covered injuries like broken bones, ER visits, or ambulance rides

• Critical Illness Insurance: for covered serious illness, such as cancer, a heart attack, or a stroke

• Hospital Indemnity Insurance: for unexpected hospital stays, including childbirth

Employees can enroll in one or combine all three. When a covered event happens, they’ll submit a claim to receive their cash directly. Cash paid to employees can be used to cover life expenses, whether that’s offsetting lost wages for time off work or covering medical bills, groceries, rent, childcare, or anything else that comes up.

Am I Required to Offer Supplemental Health Benefits 

Supplemental health benefits are not required by federal law and don’t count toward the Affordable Care Act's minimum essential coverage requirements. They aren’t a substitute for a primary medical plan. Rather, they’re an optional add-on employers can choose to make available to their employees to augment their existing medical coverage. 

Reasons Employers Offer Supplemental Health Benefits 

A few things are pushing supplemental health benefits into the mainstream:

Offset Rising Healthcare Costs

Employees are absorbing more through higher deductibles, coinsurance, and out-of-pocket maximums. According to the Kaiser Family Foundation(opens in a new tab), just under half of US adults feel it’s difficult to afford healthcare, and about three in ten say they or a family member in their household had problems paying for health care in the past 12 months. The same research found that 36% of adults have skipped or postponed getting health care they needed because of the cost in the past 12 months. When you consider that the average cost of a three-day hospital stay is $30,000(opens in a new tab), those numbers aren’t so surprising. 

Boost Recruiting and Retention

A more complete benefits package is a big reason hiring candidates pick one company over another and also impacts whether employees stay long-term. Broader coverage, more perks, more plan options, and financial incentives are all part of what people weigh when they're deciding where to work in addition to salary. 

Add Value Without Added Costs

Supplemental benefits are an employee-paid option that helps employers offer a richer benefits package without adding financial strain to your budget. They complement existing medical, dental, and vision insurance by providing an added layer of financial protection for expenses that typical health insurance doesn’t cover. 

How to Get Supplemental Health Insurance for Your Team

Employers can offer supplemental health benefits through a PEO like Justworks, an insurance broker, or directly with a carrier. 

Through a PEO Like Justworks

Coverage is available to eligible employees during Open Enrollment or after a qualifying life event(opens in a new tab), but not mid-year outside of those windows.

We make your life easier by enabling you to offer employees supplemental health benefits without negotiating or dealing with insurance providers separately or worrying about administration tasks. Payroll deductions are calculated and deducted from employees’ paychecks automatically.

Other Options Outside of a PEO

If your company isn't using a PEO, working with a broker or an insurance carrier directly is a possible alternative. If you go this route, this typically means the employer sets up and manages coverage as a separate plan by choosing a carrier, arranging manual payroll deductions, and handling enrollment outside the process used for medical, dental, and vision. 

Why a PEO Offers an Advantage

The benefit of a PEO like Justworks is that supplemental health benefits will be automatically managed inside the enrollment platform employees already use for other benefits. Plus, the coverage and rates are more competitive than managing plans individually. That means there's no separate plan to set up or maintain.

Common Questions Employers Ask

What if an employee already has good health insurance? Medical insurance pays providers. Supplemental health insurance pays the employee directly, covering the costs that show up around a medical event, like lost wages, childcare, or rent, not just the medical bill itself.

Can employees choose which supplemental health insurance plans to enroll in? Yes, employees can pick accident insurance, critical illness insurance, hospital indemnity insurance, or a combination, based on their situation, such as a high-deductible health plan, a family history of illness, or an upcoming pregnancy.

Are supplemental health insurance premiums pre-tax or post-tax? It depends on how the plan is set up, and this affects whether any payout is taxable to the employee. This is a tax question specific to your plan design, so consider confirming with your PEO or a tax advisor first.

How Supplemental Health Benefits Work With Justworks

Supplemental health benefits help you take better care of your team by offering your employees tangible value. They offer tangible value to employees in these ways:

• Easy Enrollment for Eligible Employees: No medical exams or health questions needed

• Portability: Employees keep their plan even if they leave your company

• Wellness rewards: While this can vary by provider, at Justworks, supplemental health benefits through Aflac. Through Aflac, employees can receive up to $75 per covered family member, per policy each year for eligible preventive exams like an annual physical or a mammogram, when covered through Critical Illness and Accident Insurance. Hospital indemnity insurance pays up to $50. For some families, that alone offsets some or all of the premium cost.

How to Offer Supplemental Health Benefits Through Justworks 

Justworks makes it easy to offer your team supplemental health benefits without extra cost or work for you, strengthening your benefits package during Open Enrollment season. If you become a Justworks customer and your company is offering an eligible medical plan, your employees can add Accident, Critical Illness, and Hospital Indemnity insurance during enrollment. You don’t have to set up a separate plan, manage a new provider, or handle additional paperwork tied to enrollment. Employee sign-ups for supplemental health benefits run through the same Open Enrollment process your employees already use.

Benefits Support and More  

In addition to supplemental health benefits, Justworks customers on our PEO Plus plan also get access to other perks like mental health care, fertility and family building services, on-demand primary care, and round-the-clock health advocacy. These perks come at no additional cost, helping you offer your employees the care they need without extending your budget. 

Our PEO platform goes beyond just benefits access, simplifying complex and time-consuming HR tasks with built-in compliance features that make adjustments and send you notifications so you can stay compliant. Get started with Justworks today.