Hot List 2013: Dental and Vision Insurers
To enrich the information we provide in our Hot List, Workforce will be adding reports on the industries covered in the list. In this first installment, we look at vision and dental plans.
Vision and dental-care plans are growing in popularity among employers who see these ancillary plans as a low-cost way to round out their benefit offerings at a time when budgets are strained to the hilt and employees are taking on a greater share of their health care costs.
Despite the fact that these plans are paid for in part or entirely by employees, enrollment rates are increasing. Alyssa Williamson, a benefits consultant for Mercer in Atlanta, says this is because the cost and health care benefits these plans offer far outweighs the amount of money workers pay.
"Traditionally, these benefits have been employer-paid, but with rising health care costs, many dental and vision plans have shifted to being employee-paid yet there is high participation because employees see value in it," she says. "And employers see dental and vision as a strategy to keep their health care costs down."
Regular eye exams, for example, can catch not only eye-related conditions like glaucoma and cataracts, but also other health problems such as diabetes and hypertension.
"There has been an increasing focus on total health management and the importance of dental and vision care to overall health," Williamson says. "There's been a lot of press around how dental and vision care can detect many other health problems. This is a very inexpensive way for employees to take control of their health."
In addition to the health care benefits, employers also see these plans as way to attract workers. In fact, many see dental and vision benefits as a "differentiator" when it comes to recruiting and retaining employees, according to a 2011 employer survey by the National Association of Dental Plans. The survey shows that 47 percent of employers believe dental plans distinguish companies from the competition, up from 35 percent in 2008, and 53 percent believe the same thing about their vision-care plans.
"Right now unemployment is high, but there is a shortage of skilled workers so many clients are coming to us for consulting services around recruiting and retention," Williamson says. "Compensation packages are being looked at in their entirety, and employers are using dental and vision care as way to round out their benefits package."
Employees don't seem to mind paying for these benefits and often don't even realize that they are, says Kim Landry, an analyst with LIMRA, an association of insurance and financial service companies based in Windsor, Connecticut that used to be known as the Life Insurance and Market Research Association. And employers see voluntary benefits as a way to beef up their benefit offerings at no cost to them.
From employees' perspective, "they are getting the same benefits whether the plan is employer paid or is a voluntary benefit," she says. "It's paycheck-deducted and employees like that model. You don't have to think about it. It's not money that shows up in your bank account and then disappears. From an employer perspective, as health care costs rise, it's a way to attract and retain with benefits they don't have to pay for."
Enrollment in dental benefit plans has been steadily rebounding since 2009 when enrollment rates took a big hit because of high unemployment caused by the recession, says Evelyn Ireland, executive director of the National Association of Dental Plans, or NAPD, in Dallas.
In 2011, there were about 176 million people, or 57 percent of the U.S. population, enrolled in a dental benefit plan, according to a 2012 report by the NAPD and the Delta Dental Plans Association. That represents an increase of a half of a percentage point, according to Ireland, who says that she expects to see another increase in 2013.
The most popular type of dental plan is dental preferred provider organization, which makes up nearly three-fourths of the market. The dental insurance market was valued at $38.6 billion in 2010, according to the NAPD.
Overall, more employers are offering dental benefit plans, especially smaller employers, she says. Costs are shared by employer and employee in 66 percent of the plans and paid for by employees only in about a quarter of the plans, according to NAPD figures.
"At the broadest level, there is a continued rebounding in enrollment levels and there has been strong price competition," she says. "There are lots of carriers in the market. It's typical for there to be 20 to 30 carriers in a particular state, so there is a lot of competition."
The vision market is also booming, Landry says. The number of employers that offer vision plans has doubled since 1994, with more than half of all companies providing a vision care benefit in 2011, she adds.
"It's a popular benefit among employees as more and more need glasses every day," Landry says. "When we asked employers which benefit plan they wanted to add after medical, vision was second after dental so we see an opportunity for growth."
And it's not just older employees who appreciate vision-care benefits.
"Employers tend to think that their older employees value vision benefits more than younger employees because they are more likely to need glasses, but that assumption is completely wrong. Using [age] 40 as a dividing line, both groups value it equally—65 percent for both. I think that speaks as to how enduring these benefits are."
How the Patient Protection and Affordable Care Act will impact these plans remains to be seen, experts say. At this point, the law only mandates that state health care exchanges offer dental benefits for children, which is considered an "essential health benefit."
"There's been a lot of talk about how dental fits in to the ACA," says Mercer's Williamson. "As for vision, we call it the 'vision black hole' because it's really not addressed at all, which many of us find surprising."
Betsy Shepherd is a Workforce contributing editor. Follow Workforce on Twitter at @workforcenews.
Workforce Management, April 2013, p. 22-24 Subscribe Now!