What supplemental insurance is built for
Products like Aflac, Colonial, and Cigna supplemental are income protection - they pay the employee a lump-sum cash benefit when a covered event occurs (accident, hospitalization, critical illness diagnosis, short-term disability). The premium is typically employee-paid, voluntarily elected, and the benefit replaces income or covers out-of-pocket exposure that the primary health plan doesn't.
What the EHP SIMERP is built for
The EHP program is preventative care access plus tax-savings reimbursement. There's no payout-on-bad-event component. The economic value is in ongoing primary care, urgent care, mental health, prescription discounts, and family coverage - plus the FICA tax savings to the employer and the take-home pay increase to the employee.
Side-by-side
| Aspect | EHP SIMERP | Supplemental insurance |
|---|---|---|
| Type | Reimbursement plan | Insurance product |
| What it pays for | Routine preventative care, ongoing | Cash on covered bad events |
| Funding | Section 125 pre-tax election + employer admin fee | Employee-paid premium (post-tax typically) |
| Employer payroll-tax impact | Reduces employer FICA | No impact (or minor) |
| Employee take-home impact | +$100–$150/mo | −Premium (typically $15–$60/mo) |
| Family coverage | Included at no additional cost | Per-dependent rider with additional premium |
| Sits alongside primary health plan? | Yes | Yes |
When supplemental insurance might be the right call
If your priority is income protection in the event of a serious accident or illness - particularly for hourly workforces where a 4-week hospitalization could be financially catastrophic - a supplemental product is doing a job the EHP SIMERP isn't designed for. Most employers benefit from offering both, not from choosing one.
Common questions
Yes. They serve different functions and there's no structural conflict in offering both. Many employers we work with already have an Aflac or Colonial benefit in place for catastrophic events and add EHP for ongoing preventative care access.
No. EHP is preventative care reimbursement; STD, accident, and critical illness insurance are separate products that cover catastrophic income protection. Employees who need income protection should retain those.
Most brokers earn commission on supplemental insurance premiums, and the EHP-style SIMERP doesn't generate commission in the same way. The structural compensation difference shapes which products get presented to employers - not maliciously, but predictably.
See also: EHP vs. Section 125 indemnity plans · EHP vs. doing nothing