In the face of rising healthcare costs that burden employees and strain household finances, employers have a powerful but underutilized tool: supplemental health benefits. These voluntary programs can shield employees from high out-of-pocket costs and enhance your total rewards package without significant expense. In fact, innovative approaches can even return savings to your health plan. Below, we explore why supplemental health benefits are more crucial than ever and how they offer a win-win for both employees and employers.
Employees Face a Growing Healthcare Cost Burden
Out-of-pocket costs are surging. Over the past decade, the average health plan deductible has jumped 43%, now averaging roughly $2,600 for small employers and around $1,670 for large employers1. Wages have not kept up, which means doctor visits, prescriptions, and urgent care costs hit wallets harder each year.
The result: financial strain and tough choices for workers.
- Nearly half of U.S. adults say it is difficult to afford healthcare and related bills.
- 1 in 3 adults report skipping or postponing needed medical care in the past year because they could not afford it1.
- 4 in 10 Americans have health-related debt2.
- Almost half of Americans receive surprise medical bills, 37% do not have even $400 set aside for an emergency and 57% cannot readily cover $1,0002.
Rising medical expenses have become one of the biggest financial worries for many American families, often outweighing everyday costs like groceries or utilities.
How Supplemental Health Benefits Provide Relief
Voluntary supplemental health insurance coverages like accident, critical illness, hospital indemnity, cancer plans, etc., have emerged as financial safety nets for employees. These plans pay cash benefits directly to employees and covered family members when they experience qualifying medical events, helping them cover deductibles, copays, lost income, or other expenses.
These plans help “fill the gaps” so that an unexpected injury, ER visit, or serious diagnosis does not turn into a personal financial crisis.
A Strategic Advantage for Employers
For employers, offering supplemental health benefits can be a high-impact, low-cost enhancement to your total rewards strategy. Because these programs are typically voluntary (employee-paid), you can expand your benefits portfolio with minimal impact on your budget.
Moreover, a strong benefits package is a key tool for attracting and retaining talent in a competitive labor market.
- 85% of organizations report that their benefits program boosts employee satisfaction3.
- Roughly 75% see positive impacts on recruitment, retention, and employee performance as a result3.
Offering a robust suite of benefits can differentiate your organization as one that truly invests in its people, yet relatively few have fully responded by providing coverage.
- 46% of employers offer accident insurance,
- 27% critical illness insurance,
- 25% hospital indemnity coverage,
- 11% offer all three of these supplemental health benefits3.
This represents an opportunity for forward-thinking employers to step up and offer benefits that can fill gaps in coverage that competitors might not be addressing.
Reimagining Your Voluntary Benefits Strategy: Taking a Different Approach
While supplemental health benefits are more popular and relevant than ever, it’s essential to modernize your approach to offering them. Recent developments have raised the stakes for employers to manage these programs diligently:
Beyond compliance, employers are exploring alternative plan structures that fundamentally change the economics of supplemental benefits. For example, group captive insurance models allow multiple employers to band together and share the risk (and reward) of voluntary benefits. In these models, any premium dollars left after paying claims and expenses are returned to participating employers as dividends, which can be reinvested into the health plan or used to offset future employee premiums.
With most solutions in the market, carriers retain the profits. Alternative solutions aim to reduce costs for employees while redistributing excess funds back to the plan instead of into vendor pockets. The end result can be lower premiums for employees, expanded coverage, and potential dividends that can allow employers to enhance benefits. As an example, we have seen employers use dividends to provide a weight loss program that includes GLP-1s.
We’d be remiss not to address the growing scrutiny around voluntary benefits.
In late 2025, a wave of ERISA fiduciary lawsuits challenged how employers and brokers manage voluntary benefit plans particularly around excessive premiums and lack of oversight. These cases are reshaping expectations and raising the bar for compliance. Rather than shy away from voluntary benefits, employers should embrace them as an opportunity to modernize their benefits platform.
Are you confident your voluntary benefits are compliant?
- Have you reviewed your practices to determine if your voluntary benefits are ERISA plans, and are you following the appropriate fiduciary processes?
- Do you have full transparency into how your broker or consultant is compensated?
- Are you receiving financial performance reports that support the premiums your employees pay?
- When was the last time you rebid or renegotiated your voluntary benefits through a formal RFP process?
- Are your employee communications clear, complete, and compliant?
Employers who can confidently answer “yes” to these questions are likely treating their voluntary benefits with the same diligence as their retirement or core health plans — and are better positioned to avoid fiduciary liability and improve plan competitiveness. If you’re unsure, it may be time for a deeper review.
Call to Action: Strengthen Your Plan with EPIC
At EPIC, we have solutions to help employers offer more competitive, innovative, supplemental health programs. Our team can assist in identifying the most appropriate funding strategies to optimize costs for both employers and employees, while structuring plans that meet fiduciary standards and support your compliance objectives. We invite you to engage EPIC’s team to review your voluntary supplemental health benefits plan.
