Employees may choose to take advantage of additional benefits offered through their employers at a lower rate than they could get on their own. Employers do not typically pay for, or contribute to, voluntary benefits. The employee pays for these through an automatic payroll deduction.
Did you know...? The distinction between a "voluntary" and "ancillary" benefit is whether an employer pays for, or contributes to, the cost of the benefit. What is considered voluntary vs ancillary varies by employer.
Your employer may offer cancer insurance as a voluntary benefit to help protect you financially in the case of a cancer diagnosis. Cancer insurance can supplement your regular medical and disability insurance as you incur various medical and related expenses during cancer treatment.
Cancer insurance benefits may be used to cover various expenses associated with cancer and may help pay for the following:
- Out-of-pocket medical expenses
- Out-of-network services
- Experimental cancer treatment
- Travel and lodging costs
- Home health care
- Child care and household help
- Routine living expenses, such as rent or mortgage payments, utility bills and groceries
How Does Cancer Insurance Work?
When you purchase a cancer insurance policy, you can typically choose a benefit amount, often between $10,000 and $50,000, and your premiums will be based on the chosen benefit amount. Cancer insurance will typically only pay benefits for the first occurrence of a cancer and will not be of any use if you have already been diagnosed.
When you are diagnosed with cancer, most plans will send a lump-sum payment directly to you or your designated recipient. You then choose how to spend the benefit money—whether it’s for out-of-pocket medical expenses or replacing lost income to help you buy groceries, pay your rent or mortgage, cover utility bills, etc.
Make sure you read your policy benefits carefully for any listed exclusions; for example, many plans do not cover most skin cancers.
Most pet insurance plans focus on non-routine care and will cover a new illness, disease or injury. Some plans will cover chronic or hereditary conditions, but others will specifically exclude these even if they are diagnosed after your policy begins.
A few examples of the conditions pet insurance might cover include:
- Eye and ear infections
- Broken leg
- Lyme disease
What isn't covered?
Pet insurance policies will also specify expenses that they will not cover. While every plan is different, the following items are typically excluded:
- Elective procedures
- Prosthetic limbs
- Training or behavioral problems
- Pre-existing conditions
- Burial-related expenses
If wellness, preventive or routine care is covered, it will usually be offered as a separate package that can be added on for an additional premium.
Retirement benefits are amounts paid by an employer to a former employee or beneficiary after the employment ends as required under a written retirement plan. There are two major types of retirement plans.
- Defined Benefit Plan—funded by the employer, promises you a specific monthly benefit at retirement. The plan may state this promised benefit as an exact dollar amount, such as $100 per month at retirement. However, it usually calculates your benefit through a formula that includes factors such as your salary, your age and the number of years you worked at the company. For example, your pension benefit might be equal to 1% of your average salary for the last 5 years of employment multiplied by your total years of service.
- Defined Contribution Plan—does not promise you a specific benefit amount at retirement. Instead, you and/or your employer contribute money to your individual account. In many cases, you are responsible for choosing how these contributions are invested and for deciding how much to contribute from your paycheck. Your employer may add to your account, sometimes by matching a certain percentage of your contributions. The value of your account depends on how much is contributed and how well the investments perform. At retirement, you receive the balance in your account, reflecting the contributions, investment gains or losses and any fees charged against your account. Traditional and Roth 401(k) plans are popular types of defined contribution plans.
Traditional 401(k) vs Roth 401(k)
The main difference between a traditional 401(k) and a Roth 401(k) is how the money is taxed. Under Roth 401(k) plans, you contribute money that has already been taxed. Then, when you are 59 and a half or older, money you take out of the account—whatever interest the money has earned is tax-free, regardless of how long ago you invested the money or how large your account grew.
Contributions to traditional 401(k) plans are subtracted from your taxable income, meaning you don’t pay taxes on the money before you put it into your account. This also lowers your yearly tax burden and allows for large initial investments. However, you must pay taxes on money you withdraw from the account.
There are many additional differences and regulations involving retirement accounts, so take time to familiarize yourself with them before making any decisions about your retirement benefits.