What are ancillary benefits? A practical guide with 20+ examples

Ancillary benefits are non-core employee benefits offered in addition to primary coverage like health insurance, dental, and retirement plans. Also called supplemental benefits or voluntary benefits, they include offerings like wellness programs, flexible work arrangements, childcare assistance, pet insurance, and financial wellness tools — perks that support employees' full lives, not just their time on the clock.

Today's workforce, especially younger employees, wants more than a paycheck. They want employers who see them as whole people. More than 50% of 18- to 34-year-olds prioritize a good benefits package when deciding where to work. Ancillary benefits aren't just nice-to-haves. They're a powerful tool for attracting and retaining top talent.

What does "ancillary" mean?

The word ancillary means "providing support to" or "supplementary to" a primary thing. In a medical or hospital context, ancillary services refer to the diagnostic, therapeutic, and support services that complement direct patient care, like lab work, physical therapy, or imaging. In an employee benefits context, ancillary benefits are the supplemental offerings that complement core medical coverage.

You may see the terms ancillary benefits, supplemental benefits, voluntary benefits, and fringe benefits used interchangeably. While they overlap, there are meaningful distinctions — more on that below.

What is the difference between core and ancillary benefits?

Employee benefits fall into two distinct categories:

Core benefits are the primary benefits most companies offer as standard compensation. They are critical to the employee experience and financial security. The most common core benefit is health insurance (medical coverage), often paired with dental and vision.

Ancillary benefits are the add-on perks a company offers in addition to core benefits. Unlike core benefits, which tend to be standardized, ancillary benefits vary widely by company, industry, and workforce need.

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. In tune with its "Live and Work Anywhere" philosophy, Airbnb offers a benefits package that includes quarterly travel credits, a work-anywhere allowance, and an annual educational stipend.

Why are ancillary benefits important?

Four out of five employees prefer new benefits or perks to a pay raise. When thoughtfully chosen, ancillary benefits improve employee satisfaction, reinforce company culture, and help organizations stand out in a competitive talent market. Here's how:

1. Boost employee satisfaction

Ancillary benefits, whether a meal stipend, mental health resources, or pet insurance, signal to employees that their whole selves are valued. 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.

Even small perks make a difference. 67% of hybrid employees say they'd be more willing to work onsite if offered free lunch. As Stefania Mallett, cofounder and CEO of ezCater, puts it:

"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."

2. Attract and retain top talent

A well-crafted ancillary benefits package reflects your culture and tells a compelling story about what it's like to work at your organization. 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 — a striking example of how targeted ancillary benefits drive retention.

• Benefits signal culture fit before a candidate even joins
• Targeted perks (like childcare) address specific life-stage needs that generic compensation can't
• Thoughtfully chosen benefits reduce turnover and its associated hiring costs

3. Enhance productivity

Happy employees are, on average, 12% more productive than unhappy ones. An employee who uses a company wellness program, and as a result exercises regularly and manages stress better, will likely be more focused, energetic, and less likely to take sick days. Research consistently links employee wellbeing to better performance outcomes.

• Wellness benefits reduce absenteeism and presenteeism
• Stress management resources help employees stay focused during the workday
• Healthier employees tend to have more energy and stronger concentration

4. Improve morale and company culture

Benefits that align with your company's core values make those values tangible. Coursera, for example, gives all employees lifelong free access to any course or certification on its platform and reimburses the cost of tuition for master's degree programs, a direct expression of its lifelong learning mission.

• Values-aligned benefits reinforce culture in a concrete, daily way
• Perks that reflect your mission attract employees who share it
• A strong benefits culture fosters community and shared purpose across teams

5. Promote work-life balance

Benefits like flexible work, generous PTO, childcare, and elder care support help employees manage personal and professional lives more effectively, reducing burnout and increasing long-term retention.

• Flexibility benefits are consistently ranked among employees' top non-salary priorities
• Caregiving support reduces absenteeism and unplanned leave
• Work-life balance benefits signal trust, which strengthens employee loyalty over time

6. Encourage innovation and creativity

Well-supported employees are more likely to think outside the box. Nestle's InGenius program, for instance, is an employee innovation accelerator that invites employees to pitch and develop their own creative ideas.

• Employees with lower stress levels have more cognitive bandwidth for creative thinking
• Learning and development benefits expose employees to new ideas and perspectives
• Programs that celebrate employee ideas, like innovation challenges, build engagement and ownership

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Types of ancillary employee benefits: 20+ examples

Ancillary benefits span a wide range of categories. Below is a comprehensive list of ancillary benefits organized by type, along with examples of how companies put them into practice.

Wellness programs

To promote employee health and productivity, consider offering:

Gym memberships and fitness benefits

‍Get employees moving with gym memberships, fitness classes, or on-site fitness centers. These benefits help build a healthy workforce, leading to increased energy and reduced sick days. Vendors like Wellhub (a Nava Preferred Partner) make it easier than ever to offer comprehensive, affordable fitness benefits.

Disease prevention and health screenings

‍Preventive care programs that go beyond standard health insurance coverage, like on-site biometric screenings, DNA-based health risk assessments, or preventive health coaching, can reduce long-term healthcare costs and catch issues early.

Healthy meal programs

‍Depending on budget, offer healthy lunches at discounted rates or partner with local grocers to provide coupons and vouchers for healthy food.

Stress management and mental health resources

‍Modern workplaces can be stressful. Wellness coaching, mindfulness workshops, counseling sessions, support groups, and paid subscriptions to mindfulness apps like Calm all 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. Google addresses this with one-on-one financial coaching, student loan reimbursement, and annual pay equity analysis. Origin (another Nava Preferred Partner) is a strong resource for delivering financial wellness benefits at scale.

Employee assistance programs (EAPs)

EAPs provide employees with confidential access to counseling, therapy, and expert support, covering everything from mental health and substance use to legal and financial concerns.

Telemedicine and virtual care

‍Virtual healthcare access gives employees on-demand medical consultations without the hassle of scheduling in-person appointments. This is especially valuable for remote or distributed teams.

Smoking cessation and substance use programs

‍Employer-sponsored programs that support employees in quitting smoking or addressing substance use issues improve long-term health outcomes and reduce absenteeism.

Work-life balance benefits

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

Flexible and remote work arrangements

‍Nearly 65% of U.S. employees ranked flexible work schedules as their top non-salary priority when choosing a job. Remote work, hybrid schedules, and compressed workweeks are now baseline expectations for many candidates.

Dependent care assistance programs (DCAP)

Over 30% of employees have voluntarily left a job due to caregiving responsibilities. Offering robust dependent care benefits helps reduce turnover and signals that personal responsibilities are respected.

Childcare subsidies or on-site daycare

‍In Q1 2024, over 100,000 Americans had to miss work due to inaccessible childcare. The U.S. Bureau of Labor estimates that $122 billion is lost annually due to parents dropping out of the workforce. On-site daycare or childcare subsidies can help attract and retain working parents.

Elder care support

‍As the workforce ages, elder care benefits, like referral services, subsidized in-home care, or backup adult care, are becoming a meaningful differentiator for employers.

Generous paid time off (PTO)

‍Beyond standard vacation, offering mental health days, volunteer days, and sabbaticals for tenured employees reinforces a culture that values rest and recovery.

Parental leave

‍Robust parental leave policies, for birthing parents, partners, and adoptive parents, signal a commitment to supporting employees through major life transitions.

Financial security benefits

Sixty percent of full-time employees are stressed about their finances. Even among those earning more than $100,000 per year, nearly 47% worry about money. Financial security benefits help employees focus at work without the weight of pressing financial concerns.

Student loan repayment assistance

‍Student debt weighs heavily on many young professionals. Student loan repayment assistance is a significant perk for recent graduates entering the workforce.

Legal assistance programs

‍Legal issues can be overwhelming and expensive. Legal assistance programs offer employees access to affordable legal advice and services for common personal matters.

Identity theft protection

‍These programs help safeguard employees from the financial and emotional consequences of identity theft, an increasingly common concern in a digital-first world.

Pet insurance

‍Pets are part of the family. Pet insurance helps employees manage the cost of unexpected vet bills, reducing financial stress and boosting loyalty.

Commuter benefits

Commuter benefits, including transit passes and parking subsidies, ease the financial strain of getting to and from work. Hybrid and remote options can reduce commuting costs further.

Auto and home insurance discounts

‍Employer-negotiated group discounts on auto and home insurance put money back in employees' pockets on expenses they're already paying.

Tuition reimbursement and education assistance

‍Supporting employees who want to pursue degrees, certifications, or continuing education builds loyalty and keeps skills sharp. This is a particularly strong benefit for organizations focused on internal mobility.

Lifestyle and culture benefits

Travel and experience stipends

‍Companies like Airbnb offer quarterly travel credits that align directly with their brand identity. Travel or experience stipends are a creative way to extend culture into employees' personal lives.

Professional development and learning stipends

‍Annual budgets for conferences, courses, books, or coaching signal investment in employees' long-term growth.

Volunteer time off (VTO)

‍Paid time to volunteer for causes employees care about strengthens community ties and reinforces a values-driven culture.

Work-from-anywhere allowances

‍Home office stipends, internet reimbursements, and co-working memberships have become standard for distributed teams.

Ancillary benefits vs. voluntary benefits

Although often used interchangeably, ancillary and voluntary benefits refer to distinct concepts. Understanding the difference helps HR leaders design more strategic, cost-effective 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 dental, vision, life insurance, and disability insurance
• Helps round out a comprehensive total rewards package

Voluntary benefits

• A subset of ancillary benefits that are entirely optional and primarily employee-paid
• Funded via payroll deductions, often at negotiated group rates
• Covers life-stage-specific needs like pet insurance, accident insurance, identity theft protection, or critical illness coverage
• Addresses diverse employee needs without significantly increasing employer costs

Differentiating between the two matters most during open enrollment communications and when evaluating which offerings align with workforce demographics and organizational goals.

Ancillary benefits vs. ancillary coverage: what's the difference?

You may also encounter the term "ancillary coverage" — particularly in insurance contexts. While the terms overlap, ancillary coverage typically refers specifically to insurance-based products that supplement major medical coverage, such as dental, vision, life, and disability plans. Ancillary benefits is a broader term that includes both insurance products and non-insurance perks like wellness programs, flexible work, and financial wellness tools.

Planning and implementing ancillary benefits

A well-planned ancillary benefits package is an investment in your biggest asset: your people. Follow these steps to design and implement a program that works for employees and employers alike.

Step 1: Conduct a needs assessment

Identify the benefits that matter most to your workforce through:

• Surveys and focus groups: Gather direct employee feedback on priorities and desired benefits. This guide can help.
• Benefits utilization data: Identify underused benefits or gaps in current coverage.
• Market research: Stay informed about industry trends and competitor offerings to stay competitive.

Step 2: Determine the budget

The Bureau of Labor Statistics reports that benefits account for 31% of a company's total compensation expenses. Use this as a baseline when determining what's realistic for your organization.

Budgeting tips:

• Run a cost-benefit analysis for each benefit option before committing
• Consider phased implementation if budget is tight
• Explore voluntary benefits, which shift some cost to employees via payroll deduction

Step 3: Research and select providers

With a budget in place, find the best partners for your chosen ancillary benefits. Your broker should be a strong resource here.

• Request proposals from reputable providers covering offerings, pricing, and service levels
• Compare network coverage, customer service reputation, and technology integration
• Check references from existing clients before signing

Step 4: Negotiate favorable rates and terms

• Highlight the size and demographics of your employee base for customized pricing
• Consider long-term contracts in exchange for better rates
• Review renewal terms carefully each year

Step 5: Communicate benefits effectively

• Create clear materials, like brochures, videos, and emails, outlining available benefits and how to access them
• Host benefit fairs so employees can interact directly with providers
• Tailor outreach by demographic to ensure everyone understands the value. Frequent reminders help employees stay informed year-round.

Step 6: Enroll employees

• Implement an online enrollment platform that lets employees review and enroll at their convenience
• Offer personalized support during enrollment to address questions. Nava Benefits gives employees direct access to benefits experts throughout the process.

Step 7: Manage and administer the program

• Invest in technology that streamlines enrollment, claims processing, and communication
• Monitor benefit utilization regularly and review effectiveness
• Maintain strong vendor relationships to get the best rates and resolve issues quickly

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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 periodic employee satisfaction surveys to gauge sentiment toward the overall program and specific benefits. Use engagement metrics, like participation in voluntary benefits, attendance at wellness programs, and EAP usage, to measure utilization. Exit interviews can also reveal whether benefits played a role in an employee's decision to leave.

Monitor absenteeism and presenteeism

Absenteeism (unplanned, unjustified absences) and presenteeism (being present but not fully productive) are both costly. Track whether wellness programs, flexible work, or mental health benefits have a measurable positive impact on both.

Measure healthcare costs and utilization

Track costs over time to see whether preventive care programs reduce claims. An increase in health screenings and early interventions can signal that employees are engaging with the benefits and avoiding more expensive downstream care.

Analyze productivity and performance metrics

Monitor sales figures, project completion rates, or customer satisfaction scores alongside benefits implementation. Performance reviews can also reveal qualitative shifts in employee focus and motivation.

Pro tip: No single metric tells the full story. Combine several over time to build a complete picture of program effectiveness.

Challenges and considerations

Staying within budget: Run a cost-benefit analysis to quantify the impact of each benefit and prioritize accordingly. Phased implementation helps manage costs over time.

Educating employees about benefits: Employees often underestimate the value of their benefits. Work with your internal communications team to develop clear, accessible materials that explain what's available and why it matters.

Low employee participation: Simplify the enrollment process, offer one-on-one support, and highlight the value through targeted communication to increase participation in voluntary benefits.

Privacy and data security: Ancillary benefits involve sensitive employee data. Implement strong security measures and verify compliance with relevant data privacy regulations.

Administrative overload: Managing multiple providers is time-consuming. A trusted benefits partner like Nava Benefits can consolidate administration and reduce that burden significantly.

Legal considerations and best practices

Non-discriminatory benefits

Ancillary benefits must be offered without discrimination based on age, gender, or disability. Develop clear eligibility criteria that comply with anti-discrimination laws.

Compliance with healthcare laws

Certain ancillary benefits, like health savings accounts (HSAs), have specific eligibility requirements under the Affordable Care Act (ACA). Consult with legal counsel to confirm compliance.

ERISA considerations

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

State and local regulations

Ancillary benefits may be subject to state and local regulations. Research laws in your area, as requirements vary significantly by jurisdiction.

Nava Benefits is the partner you need

Designing a balanced, customized ancillary benefits package can feel overwhelming. 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 intuitive platform makes it easy for employees to maximize benefits utilization.

Talk to an expert to learn how Nava Benefits can help you build a benefits package employees love.

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