Voluntary Dental Can Ease The Bite On Employers’ Benefit Expenses
Many employers, stung by continuing increases in health insurance premiums, are looking for ways to save some money on their ancillary employee benefits programs.
One specific benefit program under pressure is dental insurance–especially the traditional dental programs that have the employer fund the entire premium.
Aggravating the overall benefits expense dilemma for employers is a parallel trend: Dental insurance premiums have also increased significantly over the past five years.
The dental premium increases certainly do not appear to be on the same high cost spiral as those for medical insurance. And at least some of the higher dental premiums we have seen seem to have been a result of the traditional sales and marketing methods and the administrative inefficiencies present within the dental insurance industry itself. Even so, the dental plan business is facing some definite expense challenges it needs to address.
Our recent analysis of the marketplace has shown many employers are either completely discontinuing or, at the very least, shifting a significant part of the cost of dental insurance to their employees. These cost-shifting scenarios typically fall along the lines shown in the chart. And they appear to hold true, regardless of employer size–both small employer clients (under 100 lives) and larger ones have felt the pinch.
There is a silver lining to this dark cloud, however. It is this: The higher employer costs have opened the door for marketers of voluntary dental programs. Many have reported success in making new sales in this area.
If you are planning to approach this market, the following are some strategies you might want to consider.
Provide information to clients about a voluntary program.
In our experience, the typical voluntary plan design that employers initially want is one that mirrors the benefits structure of the employer-paid plan. That means low deductibles, higher maximum benefits, and, unfortunately, a resulting premium that can often prohibit good employee participation. Therefore, also do the following step.
Bring other plan design options to the table during the quote evaluation process.
This will help you keep a balance between appropriate premiums and high participation. Here are some of the design changes we believe could become much more popular in the future:
–Increase the annual benefit deductibles from the popular and traditional $50, up to $75 or even $100;