On September 3, Mercer told employers that health benefit costs will rise 8.2% per employee in 2027, the steepest increase since 2003. Your open enrollment portal opens in about six weeks, and the menu will be longer than last year’s: accident insurance, hospital indemnity, critical illness, each priced under the cost of a streaming subscription, which is exactly how they get sold. So are voluntary benefits worth it? The carriers publish the answer every quarter, and it is not in the brochure.
About half of what you pay for these policies comes back to policyholders as benefits. The other half covers commissions, administration, and profit. That is not a scandal, it is just how the product is priced, and it means you can settle the question in twenty minutes with a calculator instead of guessing.
Your benefits menu got longer because your medical plan got worse
Mercer’s preliminary results, based on more than 1,800 employers surveyed through August 10, found that companies expect total health benefit cost per employee to climb 8.2% in 2027 even after the cost-cutting they have already planned. Left alone, their current plans would cost 11% more. Roughly one percentage point of the increase traces to GLP-1 weight-management drugs.
Employers deal with that by raising your deductible. Then somebody has to sell you something to cover the deductible. That is the whole supply chain. Aflac’s own second-quarter commentary said it plainly: employees are filing more supplemental claims because primary plan changes are pushing more cost onto them.
Employees are not obviously buying the pitch. LIMRA counted $2.5 billion in new supplemental health premium in the first nine months of 2025, down 5% from the year before, with accident, critical illness, and hospital indemnity accounting for 95% of it. Sales in these three products are softening at the same moment employers are pushing them hardest, which is worth knowing before a broker tells you everyone signs up.
The number the brochure will not print
In the second quarter of 2026, Aflac’s US segment paid out 49.5% of net earned premiums as benefits and claims, up 220 basis points from 47.3% a year earlier, according to reporting on its quarterly results. Its expense ratio ran 36.1% of adjusted revenues. Pretax adjusted profit margin was 20.9%. Aflac is the largest supplemental health carrier in the country by LIMRA’s count, and that segment is dominated by exactly the products on your menu.
Compare that with your actual medical plan, which by law has to spend at least 80 or 85 cents of every premium dollar on care or refund the difference. Accident and hospital indemnity policies are classified as excepted benefits, so that rule does not touch them. The Government Accountability Office reviewed fixed indemnity products and found they generally sit outside the Affordable Care Act’s requirements, with state insurance officials describing few consumer protections.
Federal regulators did try to fix the disclosure problem. A 2024 rule would have required a plain-English notice on group fixed indemnity coverage, warning that it is not comprehensive health insurance. A federal judge in the Eastern District of Texas vacated that requirement in December 2024 after two insurers sued. So the notice that would have told you this at the point of enrollment never appeared.
Two real policies, two real prices, and the arithmetic
Public employers post their rate sheets, which means we can price this with real numbers instead of a hypothetical. The University System of Georgia publishes its 2026 employee premiums alongside the matching benefit schedules. Family accident coverage through Aflac costs $17.72 a month. Family hospital indemnity costs $24.28. Together that is $42.00 a month, or $504 a year.
Now look at what the accident plan actually pays. An emergency room visit is worth $150. A ground ambulance is $300. An X-ray is $25. A concussion is $250. A closed wrist fracture is $1,500.
So to break even on the accident plan alone, you need roughly $504 of scheduled events in a year. One bad Saturday involving an ambulance, an emergency room, and an X-ray pays $475. That is close. Two quiet years in a row, which is the more likely outcome for most households, puts you $1,008 behind with nothing to show for it.
Run the alternative. Put that same $42 a month into a savings account paying 4.00%, which several online banks still offered in September 2026. Twelve monthly deposits leave you about $513. Three years of deposits leave about $1,602 against $1,512 of your own money. The difference is not the interest. It is that the $1,602 pays for the deductible, the copay, the week you could not work, or the transmission, and nobody has to approve a claim form first.
I dropped a hospital indemnity rider two open enrollments ago after running exactly this math on my own plan documents. It took about fifteen minutes.
Are voluntary benefits worth it? Yes, in two situations
The first is a scheduled, covered event you already know is coming. The Georgia hospital indemnity plan pays $600 for an initial admission, $125 per day of confinement, and another $125 per day for a newborn. A two-day delivery stay therefore pays roughly $1,100 against an annual family premium of $291.36. That is not a coin flip, it is a purchase. Before you count on it, read the certificate for maternity exclusions and waiting periods, because some plans will not cover a pregnancy that began before your coverage did. Planned surgery works the same way.
The second is guaranteed issue. These policies ask no medical questions, which matters if a health history would get you declined or surcharged for individual coverage. A critical illness lump sum of $10,000 to $30,000, available without underwriting, is a different proposition for someone with a family cancer history than for a healthy 34-year-old whose real exposure is a $3,000 deductible.
Everything else is a coin flip you are paying a 50% house edge to enter. If you have already read our piece on the workplace benefits people leave unused, notice the difference: the employer-paid benefits in that article cost you nothing to claim. These cost you $504.
Check the deduction box, or your payout becomes taxable
An IRS Chief Counsel memorandum issued in 2017, number 201703013, concluded that benefits from an employer-provided fixed indemnity health plan cannot be excluded from your income when the premiums were paid by salary reduction through a Section 125 cafeteria plan. Pay with pretax dollars, and the cash the policy sends you is taxable.
Most employers let you choose. Georgia’s portal says core medical, dental, and vision come out pretax while other benefits can be elected post-tax. On that $1,100 delivery payout, the choice is worth about $242 at a 22% marginal rate. If you keep one of these policies, take the post-tax deduction and keep the payout clean.
Twenty minutes, before you click submit
Find the certificate of coverage, not the glossy flyer, and locate the benefit schedule page. Add up what a realistic bad year in your household would actually pay under that schedule, then set it against twelve months of premium. Whether the schedule beats the premium is the only thing that makes voluntary benefits worth it, and for a healthy household with nothing scheduled it usually does not. Keep the one policy that covers an event you already know is coming, elect it post-tax, and send the other $42 to a savings bucket with a name on it. The bigger lever in that portal is still the medical plan itself, which we walk through in our 2027 open enrollment prep guide.
