While numerous studies and surveys highlight how health insurance is one of the most popular benefits among employees, small business owners creating a benefits package for their workforce may be wondering what other worthwhile employee benefits they should consider.

Although they are typically not required to do so, many small businesses decide to separately offer supplemental health insurance plans to help their employees with paying for medical expenses not otherwise covered through their group health plan.

Small business health insurance doesn’t always offer everything your employees and business need. For those things that are not covered under a small business health insurance plan, there’s small business supplemental health insurance. Continue reading to learn more about what small business supplemental insurance is and how it can benefit your business.

What is supplemental health insurance for small business?

A supplemental health insurance plan provides separate coverage for medical services that a basic essential group medical plan does not cover.

Examples of common supplemental insurance plans for small businesses include:

• Group dental insurance
• Group vision insurance
• Critical illness insurance
• Travel insurance

Supplemental health insurance is optional, and a small business (with less than 50 full-time equivalent employees) is not required to offer this kind coverage to its workers. Still, depending on your company’s budget and coverage preferences, it may be worth exploring the possibility of providing supplemental insurance plans to better meet the medical needs of yourself and your employees.

How does small business supplemental insurance work?

Small business supplemental health insurance covers costs that standard plans might not. In addition, small business supplemental insurance can also provide expanded coverage, as well as additional coverage for your business and employees.

These policies come in a variety of forms and can work in several ways. The supplemental insurance will represent an additional type of insurance that you will pay for specifically outside of your regular small business insurance plan.

Some insurance providers can wrap supplemental business insurance into your main policy. Some other providers may offer supplemental insurance for small businesses as add-on packages or just piecemeal. Many standard supplemental packages exist, and you can typically customize the offerings.

Types of supplemental health insurance

Here are just a few of the more standard types of supplemental business insurance options.

• Fixed indemnity insurance: Coverage for specific injuries, illnesses, or procedures. Pays out a set or fixed amount of money. Can often cover any out-of-pocket costs.
• Hospital insurance: Coverage for hospital stays. Often used to pay for the out-of-pocket costs associated with a hospital stay that small business health insurance might not cover.
• Accident insurance: Pays a set amount to cover accident injuries and healing. Coverage may only include specific types of injuries and the services necessary to help deal with them.
• Disability insurance: This type of coverage will work alongside Workers’ Compensation benefits if an employee becomes temporarily unable to work because of injury or illness. The amounts covered will depend on the plan details.
• Long-term care insurance: For someone who needs long-term care, this type of small business supplemental insurance can help your employee seek that care without giving up all their funds and assets.

Many more types of small business supplemental health insurance options exist, such as dental insurance plans. Most of these plans serve singular functions, but any of them can help expand coverage overall.

Small business supplemental health insurance: Pros and cons

Before you can make the final decision to offer your employees supplemental health insurance, it’s crucial to weigh the pros and cons of offering it. Here are just a few things to consider:

Pros 

Offering options to supplement business insurance can help to attract and retain talent for your business. The benefits package you offer will look that much stronger in the eyes of an employee because of the additional options presented.

These additions can also give a little peace to employees who don’t want to take on too great a financial burden if they or their dependents suffer an accident or illness only partially covered by basic insurance.

Those employees who already know what type of additional coverage they need will also like that your small business insurance plans can offer a focused package for them. It also helps that many supplemental plans can come at a low cost.

Cons 

Some employees or potential employees may find they simply can’t afford to add on to what they already pay for health insurance. Sometimes, small business supplemental insurance can have limits and caps that someone may not find appealing.

These supplemental policies are not the same across the board. Some offer more and some offer less, which means you, as the business owner, must choose plans you think will help your goals best.

What are the most popular small business supplemental health insurance plans?

According to a 2018 eHealth survey, the two types of supplemental insurance most often offered by small businesses to their employees are dental (52 percent) and vision (41 percent) insurance plans.

• Group dental plans – The main types of supplemental dental insurance are indemnity plans (which usually have less network restrictions), managed-care plans (such as PPO and HMO plans, which usually require a provider network), and discount plans. You can learn more about these group dental plans by reading our comprehensive guide to supplemental dental insurance.
• Group vision plans – The two primary forms of vision insurance are ancillary insurance (which covers a percentage of eye care costs, while your employees pay the rest out of pocket) and optional rider insurance (which provides access to a specific dollar amount of insurance coverage by paying a monthly premium). Learn more about small business vision coverage here.

_{Source: eHealth 2018 Small Business Health Insurance Report}

Why might a small business decide to offer supplemental insurance?

There are several compelling reasons why a small business may consider providing supplemental health insurance to its employees.

• Hiring strategy – According to a 2018 eHealth report, 66 percent of small business owners offer group medical coverage to better recruit and retain the best employees. Prospective workers may be more likely to join companies that offer appealing benefits packages, and group medical, dental, and vision insurance tend to be among the most desirable of employer-sponsored perks.
• Affordability – With vision and dental plans starting as low as $12 per month per individual on eHealth, it is easy to see why a significant number of small business owners decide to offer supplemental health insurance benefits to their workforce. Your small business may also be able to limit your actual costs through tax deductions and cost-sharing for employee premiums.
• More comprehensive coverage – No one wants to be uninsured when they need a major dental procedure or new pair of glasses. Making supplemental insurance available to your employees may provide more complete coverage for less frequent yet equally important medical services.

Overall, even though offering supplemental health insurance coverage means paying for a larger portion of employee premiums each month, the long-term benefits of offering additional plans may well outweigh the costs. Whether in the form of greater employee retention or coverage when you and your workforce need it most, supplemental plans may provide significant advantages for your small business.

Costs of small business supplemental health insurance

The cost of small business supplemental health insurance can vary widely. Most supplemental insurance comes with additional options that can increase costs or lower them depending on what the applicant wants.

This is still an insurance policy and subject to the factors that determine most insurance costs. For example, things such as the applicant’s age, location, pre-existing conditions, and a host of other things can determine someone’s cost for a supplemental policy, or even if they’re eligible for it at all.

Find insurance for your small business with eHealth

Small business supplemental health insurance coverage is an excellent way to give employees choice and control over their health insurance. Small and family-run businesses can use these policies to attract new hires, retain current employees, and show that they care about the health and welfare of their workers.

Overall, even though offering supplemental health insurance coverage means paying for a larger portion of employee premiums each month, the long-term benefits of offering additional plans may well outweigh the costs. Whether in the form of greater employee retention or coverage when you and your workforce need it most, supplemental plans may provide significant advantages for your small business.

Finding the right small business insurance isn’t always easy, but eHealth can give you the tools, information, and options necessary to navigate the often-complicated world of business insurance.

This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.