Are Supplemental Benefits Worth It?

GroupLane · July 2026

Some managers see supplemental benefits as a waste. They are not.

Almost every large company offers supplemental benefits, while most small ones do not. At companies with more than a few thousand workers, these plans are nearly universal. Among the smallest firms, voluntary benefits are rarely offered, and more than half offer no insurance at all.

Why the split? The likeliest reason is simple. A big company has someone whose job is to run the numbers on a benefit before it gets added, and that person keeps saying yes. The small business does not have that person, so it relies on instinct, and the instinct says these plans are a waste. The instinct is not baseless — priced as an investment, insurance is a poor buy, the same as any insurance. What is often missing is that the value equation is different for the employer and the employee. Voluntary benefit programs set the stage for positive employee behavior, and that creates positive bottom-line results for the employer.

Voluntary benefits lower your workers' comp premium

The comp premium is a real expense that moves with your experience record. Your premium is based on an experience modifier derived from your past claims, so a bad year follows you for about three years. Supplemental coverage can bend that record by changing employee behavior. When an employee carries accident coverage and knows how to use it, an off-the-job injury gets paid by the accident plan and never turns into a shaky comp claim.

Timing matters too. When a man knows he is covered, he reports a real on-the-job injury early instead of working hurt and waiting to see whether it settles down. The bureau that sets comp rates found that claims submitted four weeks late were about 45 percent higher than those submitted in the first week, and lawyers showed up about twice as often. Anything you keep out of comp, and any real claim you get in early, helps you at renewal.

They help keep the people you need

Brigitte Madrian studied employee turnover in the Quarterly Journal of Economics in 1994 and found that workers with employer health coverage were about 25 percent less likely to leave than those without. When a man values what he has at work, walking away costs him something, and he does it less often. Replacing one worker runs somewhere near $45,000 once you count the recruiting, the training, the overtime while you are short-staffed, and the slower, rougher work until the team is whole again. Two extra departures a year on a team of sixty is close to the spend on insurance.

High deductibles are why it works

None of these benefits appear unless the coverage means something to the worker. Employers spent the last fifteen years moving almost everyone onto high-deductible plans. The average single deductible is now about $1,787, and about a third of covered workers carry $2,000 or more, closer to half at smaller firms. A deductible like that assumes the worker can find a couple of thousand dollars when they must. A core of your workforce cannot.

The Federal Reserve asks people every year whether they could handle a surprise $400 bill in cash, and about 37 percent say they could not, with 13 percent saying they could not manage it at all. Around 41 percent of adults are already carrying medical or dental debt. Accident, disability, hospital indemnity, and critical illness coverage is built to put cash in their hands to cover what major medical does not. That is why they use it — and when they use it, the comp and turnover effects follow.

They cost employers almost nothing

Your people pay the premiums by payroll deduction, so on the employer's side the cost runs close to nothing. For that, a workforce that mostly lives paycheck to paycheck has a way to cover the gap in the health plan, and the comp and turnover benefits come with it. The only thing on the employer's part is to create the offer and ensure people understand the coverage well enough to use it.

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