What are ancillary benefits? A practical guide with 15 examples

Today’s workforce — especially younger employees — is looking for more than just a paycheck. They want to work for companies that view them as a whole person and support their lives outside of work, too.

Offering creative benefits like gym memberships, childcare assistance, pet insurance, and work-from-anywhere stipends can make your company more appealing. More than 50% of 18- to 34-year-olds prioritize a good benefits package when deciding on a job, so these additional benefits can make a real difference.

Ancillary benefits aren’t just nice-to-haves — they’re a powerful tool for attracting and retaining top talent. When thoughtfully chosen, these offerings can improve employee satisfaction, support well-being, and help your company stand out in a competitive job market.

What are ancillary employee benefits?

If core benefits are like the main course, ancillary benefits are the desserts.

Benefits are non-monetary compensation you offer on top of the employee's salary. They promote employee wellbeing and help build a positive work culture.

Employee benefits fall into two distinct categories:

1. Core benefits are the primary benefits most companies offer as a standard part of compensation. They are critical to the employee experience and add to employees' financial security. The most common core benefit is healthcare.
2. Ancillary benefits (often referred to as supplemental or voluntary benefits) ****are the add-on perks a company offers in addition to the core benefits. They are primarily non-monetary and cater to a broader range of employee needs.

Unlike core benefits, which are often the same, ancillary benefits vary widely. Google, for example, offers many ancillary benefits to support employees' holistic — financial, physical, and emotional — wellbeing. Onsite wellness centers, access to mental health apps, four "work-from-anywhere" weeks annually, and parental and baby-bonding leave are some of the diverse benefits available.

Ancillary benefits are highly customizable. Your company can choose which benefits and perks to offer depending on your budget, employee demographics, and industry practices. This lets you cater to your employees' specific needs.  In tune with its core philosophy of "Live and Work Anywhere," Airbnb offers a benefits package that gives employees quarterly travel credits, a work-anywhere allowance, and an annual educational stipend. Similarly, you can customize your benefits package to match your corporate philosophy or company values.

Another significant advantage of ancillary benefits is the flexibility they offer. Unlike core benefits, which are typically provided across the board, ancillary benefits are often optional add-ons that employees can choose based on their personal needs. For example, working parents might opt into childcare assistance, while pet owners can enroll in pet insurance.

Why are ancillary benefits important?

Four out of five employees prefer new benefits or perks to pay raises. This highlights that benefits — especially those supporting work-life balance, flexibility, and well-being — are not just perks but essential factors in attracting and retaining top talent.

Here are the top ways in which ancillary benefits add monetary and intangible benefits to your organization, helping you stand out from the crowd:

Boost employee satisfaction

67% of hybrid employees say they'd be more willing to work onsite if offered free lunch — but the takeaway isn’t just about food. It’s about feeling supported in the moments that matter.

Ancillary benefits — whether it’s a meal stipend, mental health resources, or pet insurance — signal to employees that their whole selves are valued. When employees feel that their day-to-day lives are made easier or more fulfilling, satisfaction naturally follows. A MetLife study found that employees who are satisfied with their benefits are more than twice as likely to be satisfied with their jobs overall.

According to Stefania Mallett, cofounder and CEO of ezCater:

"Even a small, thoughtful perk like free lunches or meal allowances can make employees more satisfied in their roles. Also, it aids in productivity, as employees eating together in a work setting are more likely to discuss and share ideas, which helps them enjoy a sense of belonging and increase job satisfaction."

The key is not the size of the benefit, but the message it sends: we see you, and we care about what makes your life better.

Attract and retain top talent

For HR leaders focused on building high-performing, values-aligned teams, the goal isn’t just to hire — it’s to attract people who will thrive in your organization. A well-crafted package of ancillary benefits can act as a magnet for talent that shares your company’s priorities, whether that’s flexibility, wellbeing, or growth. These benefits go beyond compensation — they reflect your culture and help tell a compelling story about what it’s like to work at your organization. And once the right people are in the door, thoughtfully chosen perks can reinforce loyalty, increase satisfaction, and reduce costly turnover.

For example, a study by Moms First and Boston Consulting Group found that 86% of working parents were more likely to stay at their company when provided with childcare benefits, highlighting the role of targeted ancillary benefits in employee retention.

Enhance productivity

Happy employees are, on average, 12% more productive than unhappy employees.

To better understand that link between happiness and workplace productivity, consider an employee who takes advantage of their company's wellness program. As a result, they start exercising regularly, eating healthier, and managing their stress better, which often translates to the workplace. These employees will likely be focused, energetic, and less likely to take sick days. As a result, the employee will concentrate better on their duties, leading to better performance and productivity.

Improve morale and company culture

Ancillary benefits also play a vital role in shaping and enriching your company culture. Offering benefits that align with your company’s core values reinforces them and makes them more tangible.

Take the example of Coursera, a leading online learning platform. All Coursera employees receive lifelong free access to any course or certifications on the platform. Coursera also reimburses the cost of tuition for employees who enroll in a master's degree. As a result, employees are likely to feel more connected with the company's vision of lifelong learning. This helps foster a sense of community and shared purpose.

Promote a healthy work-life balance

Ancillary benefits like flexible and remote work, generous paid time off, childcare, and elder care support can alleviate the stress of juggling work and family responsibilities. These benefits help employees manage their personal and professional lives more effectively, reducing burnout and increasing happiness.

Encourage innovation and creativity

Satisfied, healthy, and well-supported employees are more likely to be innovative and creative. Ancillary benefits can give employees the mental and physical space to think outside the box and bring fresh ideas. Programs encouraging continuous learning, creativity workshops, or even simple perks like team-building activities can stimulate innovation and teamwork.

For example, Nestle runs InGenius, an employee innovation accelerator that conducts innovation challenges where employees can pitch their creative ideas and watch them come to life.

Types of ancillary employee benefits

Let's examine the different categories of ancillary employee benefits and how they can add value to your employees and company.

Wellness programs

To promote employee health and productivity, consider offering the following:

• Gym memberships, fitness classes, on-site fitness centers: Get your employees moving and physically active. These benefits help you build a healthy workforce, leading to increased energy levels and reduced sick days. Plus, innovative vendors like Wellhub (a Nava Preferred Partner!) make it easier than ever to offer comprehensive, affordable fitness benefits.
• Disease prevention and health screenings: As part of the ancillary benefits package, you can offer preventive care programs that go beyond what’s covered under most health insurance plans — like on-site biometric screenings, DNA-based health risk assessments, or preventive health coaching.
• Healthy meal plans and discounts on healthy groceries: Depending on your budget, you can consider offering healthy lunches in the office at discounted rates. Alternatively, you can partner with a local organic grocery store to provide coupons and vouchers for employees to stock up on healthy groceries.
• Stress management programs and mental health resources: Modern workplaces can be stressful. Stress management resources like wellness coaching, mindfulness workshops, individual or group counseling sessions, support groups, and paid subscriptions to mindfulness apps like Calm can help employees cope better.
• Financial wellness programs: 54% of millennials have less than $10,000 set aside for retirement. And nearly 70% of people live paycheck to paycheck or have income that doesn’t cover their standard expenses. These stats highlight the importance of financial literacy, especially for younger employees. That's why companies like Google offer financial wellbeing programs, such as one-on-one financial coaching, student loan reimbursement, annual cross-company pay equity analysis, and adjustments to help employees manage their finances, build savings, and secure their futures. Origin (another Nava Preferred Partner) is a great resource for offering financial wellness benefits to your employees.

Work-life balance benefits

When employees feel balanced, they show up better in every way. Support that balance with:

• Dependent care assistance programs (DCAP): Over 30% of employees have voluntarily left a job due to their caregiving responsibilities. Offering robust dependent care benefits can help reduce turnover, lower hiring costs, and minimize absenteeism — while showing employees that their personal responsibilities are respected and supported.
• Childcare subsidies or on-site daycare: In the first quarter of 2024, over 100,000 Americans had to miss work due to inadequate or inaccessible childcare. The U.S. Bureau of Labor estimates that over $122 billion is lost annually due to parents dropping out of the workforce. On-site daycare or childcare subsidies can help attract and retain parents.
• Flexible work arrangements: When asked to rank their top five non-salary benefits, nearly 65% of U.S. employees picked flexible work schedules as their number one priority when choosing a job. Flexible work options, such as remote work, hybrid work, and compressed workweeks, can help you attract top talent for whom these benefits are non-negotiable.
• Employee assistance programs (EAPs): Life doesn’t always go according to plan. EAPs provide employees with confidential access to counseling, therapy, and expert support to help them manage personal challenges—ranging from mental health and substance use to legal and financial concerns. These programs offer critical, on-demand resources when employees need them most.

Financial Security Benefits

With inflation skyrocketing, employee financial stress is on the rise. Sixty percent of full-time employees are stressed about their finances. Among those who earn more than $100,000 per year, nearly 47% are worried about their finances. Financial worries cause a wide array of health issues in employees, like lack of sleep and loss of self-esteem, which can impact an employee's work performance.

Financial security benefits can help employees enjoy peace of mind and focus more at work without pressing worries. Here are a few benefits you can offer:

• Legal assistance programs: Legal issues can be overwhelming and expensive. Legal assistance programs offer affordable legal advice and services.
• Identity theft protection: With a digital society comes concerns about identity theft. These programs help safeguard employees from its financial and emotional consequences.
• Pet insurance: Fur babies are part of the family, too. Pet insurance helps employees manage the cost of unexpected vet bills, reducing stress and financial burden.
• Commuter benefits (transit passes, parking subsidies): Commuting costs can add up. Commuter benefits help ease the financial strain of getting to and from work, boosting employee morale. You can also consider switching to hybrid or remote work to help reduce employees' commuting costs.
• Discounts on auto and home insurance: Saving money on essential insurance is always a plus. Auto and home insurance discounts can put more money back into employees' pockets.
• Student loan repayment assistance: Student loan debt weighs heavily on many young professionals. Student loan repayment assistance is a significant perk that can attract and retain fresh talent as they graduate.

Ancillary benefits vs. voluntary benefits

Although often used interchangeably, ancillary and voluntary benefits refer to distinct concepts, and understanding the difference can help HR leaders design more strategic and cost-effective benefits programs.

Ancillary benefits

• A broad category encompassing all non-core benefits offered alongside medical, dental, and retirement plans
• Includes benefits that are employer-paid, employee-paid, or cost-shared
• Typically covers offerings like dental, vision, life insurance, and disability insurance
• Helps round out a comprehensive total rewards package to attract and retain talent

Voluntary benefits

• A subset of ancillary benefits that are entirely optional and primarily employee-paid
• Funded via payroll deductions, often at negotiated group rates
• Offers flexibility for diverse employee needs, such as pet insurance, accident insurance, identity theft protection, or critical illness coverage, without significantly increasing employer costs
• Helps address life-stage-specific needs and enhance employee satisfaction without straining the benefits budget

Differentiating between the two is especially important when communicating with employees during open enrollment and when evaluating which offerings align best with workforce demographics and organizational goals.

Planning and implementing ancillary benefits

A well-planned ancillary benefits package is an investment in your biggest asset — your employees. Follow these tips to design and implement an ancillary benefits package that is a win-win for employees and employers.

Step 1: Conduct a needs assessment

The first step is to assess your employees' needs and identify the benefits that matter to them the most. Here are a few ways to collect feedback on what employees desire:

• Surveys and focus groups: Distribute surveys and conduct focus groups to gather direct feedback from employees on their priorities and desired benefits.
• Benefits utilization data: Analyze data on current benefits utilization to identify underused benefits or areas where additional support may be needed.
• Market research: Stay informed about industry trends and competitor offerings to ensure your benefits package remains competitive.

Step 2: Determine the budget

Whether you have a large or a small budget, you first need to understand how much you can allocate to the employee benefits package. The Bureau of Labor Statistics states that benefits account for 31% of a company's expenses. You can use this as a starting point to help you determine a realistic budget for your organization.

Here are a few budgeting tips:

• Run a cost-benefit analysis: Before deciding, evaluate the potential return on investment (ROI) for each benefit option.
• Phased implementation: If you have a tight budget, consider a phased implementation plan to introduce new benefits gradually.
• Employee contributions: Voluntary benefits allow employees to share in the cost.

Step 3: Research and select ancillary benefit providers

With a budget in place, it's now time to find the best partners for your chosen ancillary benefits. As a partner who works with ancillary benefits vendors across the board, your broker should be a huge resource here.

• Gather proposals: Request proposals from reputable ancillary benefits providers outlining their offerings, pricing, and service levels.
• Compare options: Carefully compare proposals, considering network coverage, customer service reputation, and technology integration capabilities.
• Reference checks: Contact existing clients of potential providers to get firsthand insights into their service quality.

Step 4: Negotiate favorable rates and terms

Don't be afraid to negotiate!

• Leverage your numbers: Highlight the size and demographics of your employee base to check for customized pricing.
• Long-term partnerships: Consider negotiating long-term contracts with providers in exchange for more favorable pricing.
• Review renewal terms: Don't get complacent! Review renewal terms with providers so you get the best deal.

Step 5: Communicate ancillary benefits to employees effectively

Once you've finalized your ancillary benefits package, it's time to announce it effectively to employees. Here are some key strategies:

• Clear and concise resources: Develop various internal materials like brochures, videos, emails, and blogs, outlining the available benefits and how to access them.
• Benefits fairs: Organize benefits fairs so employees can ask questions and interact directly with benefit providers.
• Targeted and ongoing outreach: Tailor the resources based on employee demographics and needs so everyone understands the value proposition. Send frequent reminders and updates so employees stay informed about their benefits options.

Step 6: Enroll employees in ancillary benefits

A smooth and user-friendly enrollment process will help maximize employee participation.

• Online enrollment platform: Implement an online enrollment platform that lets employees review and enroll in benefits at their convenience.
• Personalized member support: Offer customized support during enrollment to address employees' questions or concerns. Nava Benefits offers an intuitive platform where your employees can ask their questions directly to benefits experts and resolve any issues they might face during enrollment.

Step 7: Manage and administer ancillary benefits

Ineffective management could lead to costly issues like security breaches, improper compliance, and disengaged employees, which can harm your company's reputation and bottom line.

Use these strategies to successfully manage your benefits program and avoid these issues in the long run:

• Technology solutions: Invest in solutions that streamline benefit administration tasks like enrollment, claims processing, and communication.
• Regular reporting and monitoring: Monitor benefit utilization trends and review effectiveness to identify areas for improvement.
• Vendor relationships: Maintain strong relationships with benefit providers to get the best rates and address any issues quickly.

Measuring the ROI of ancillary benefits

Here's a step-by-step guide to assess the effectiveness of your ancillary benefits program:

Track employee satisfaction and engagement

Conduct employee satisfaction surveys periodically. This helps you gauge employee sentiment towards the benefits program overall and specific benefits. Leverage engagement metrics like employee participation in voluntary benefits, attendance at wellness programs, and use of EAP services to measure benefit utilization rates.

Besides surveys and metrics, exit interviews can reveal valuable insights into why employees leave and whether the benefits program affects their decisions.

Monitor absenteeism and presenteeism rates

Absenteeism occurs when employees consistently leave work without good reason. This doesn't include planned vacations or PTO. Monitor absenteeism trends to see if implementing ancillary benefits, particularly wellness programs or flexible work arrangements, have a positive impact.

Presenteeism is when employees are physically present but not fully productive. Conduct surveys to assess presenteeism levels and identify potential factors like stress or lack of work-life balance that the benefits program could address.

Measure healthcare costs and utilization

Track healthcare costs over time to see if introducing preventive care programs positively impacts cost reduction. Analyze data on healthcare usage patterns to see if there's an increase in preventive care services like health screenings, which can potentially identify and address health issues early on.

Analyze productivity and performance metrics

Monitor metrics like sales figures, project completion rates, or customer satisfaction scores to see if there's a correlation with implementing ancillary benefits. Performance reviews are another critical tool that can reveal qualitative insights into how the benefits program impacts employee focus, motivation, and overall productivity.

Pro Tip: A single metric won't provide the complete picture. Take a comprehensive approach by combining several metrics to better understand the program's effectiveness. Also, some metrics take time to show impact, so continuous monitoring is essential.

Challenges and considerations

While ancillary benefits offer many advantages, they also come with some challenges and legal considerations. Here's how you can navigate these complexities:

Challenge: Staying within budget

• Solution: A cost-benefit analysis can help you quantify the impact of individual benefits. This helps you prioritize benefits and decide which to offer based on employee needs. You can also explore phased implementations to manage costs.

Challenge: Educating employees about benefits

• Solution: Employees might need help understanding the complete value proposition of ancillary benefits. Work with your internal communications team to develop suitable materials to educate employees.

Challenge: Low employee participation rates

• Solution: Voluntary benefits might not see high participation if employees aren't aware of the options or find them confusing. Offer one-on-one enrollment support, simplify the enrollment process, and highlight the benefits' value through targeted communication.

Challenge: Privacy and data security concerns

• Solution: Ancillary benefits involve sensitive employee data. So, implement advanced data security measures to verify compliance with relevant data privacy regulations.

Challenge: Administrative overload

• Solution: Managing multiple ancillary benefits providers can be time-consuming. This is where a trusted benefits partner like Nava Benefits can come to your rescue.

Legal considerations and best practices

Here are a few legal considerations to be aware of when implementing an ancillary benefits package:

Non-discriminatory benefits

Ancillary benefits must be offered non-discriminately, considering factors like age, gender, and disability. To comply with anti-discrimination laws, develop clear eligibility criteria for all benefits.

Compliance with healthcare laws

Certain ancillary benefits, like health savings accounts (HSAs), have specific eligibility requirements under the Affordable Care Act (ACA). Stay updated on healthcare reform laws and consult with legal counsel to ensure compliance.

ERISA considerations

The Employee Retirement Income Security Act (ERISA) regulates specific employee benefit plans. Familiarize yourself with ERISA requirements and seek legal guidance if needed.

State and local regulations

Ancillary benefits may also be subject to state and local regulations. Research relevant laws in your area to ensure compliance.

Nava Benefits is the partner you need

Designing a balanced and customized ancillary benefits package might feel overwhelming. But don't worry — we’re here to help! At Nava, we're experts at finding creative benefits solutions that enhance the employee experience.

We act as an extended arm of your HR team, handling every step of the ancillary benefits lifecycle, from implementation and administration to renewal and ongoing employee support. Our friendly and intuitive platform is hassle-free, making it easy for employees to maximize benefits utilization.

Register for our weekly demo or talk to an expert to learn how Nava Benefits can help you offer the best benefits and perks that employees love.

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