Ancillary Benefits as a Percentage of Compensation
Ancillary benefits — dental, vision, life, disability, and voluntary benefits — typically represent 5–10% of total compensation. For an employee earning $60,000, the employer may be spending $3,000–$6,000 annually on ancillary benefits. This is a significant investment that is often undervalued by employees because it is not visible in their paycheck.
The Total Package Strategy
The most effective ancillary benefits strategy designs the total package as a coherent whole. Each benefit should complement the others — dental and vision fill gaps in medical coverage; disability protects income when health problems prevent work; life insurance protects families when the worst happens. Communicating this coherence helps employees understand the full value of their benefits.
Total Compensation Statements
Pro Tip
Total compensation statements that show employees the full dollar value of their benefits — including ancillary benefits — consistently improve benefits satisfaction and perceived value. An employee who sees that their employer is spending $8,000/year on their ancillary benefits (dental, vision, life, disability) in addition to $15,000 on medical is much more likely to appreciate and value those benefits.