Fortune Smiles On Voluntary Dental

Sales were soft in 2005, but 2004 was a year of double-digit increases, and it appears as if voluntary dental sales have returned to the fast track.

The voluntary boom

Across the board, voluntary benefits – life, disability, and health care – constitute a strong growth market for the insurance industry.

LIMRA reports that voluntary coverage alone accounted for some $4.22 billion in sales in 2004, up from $2 billion in 1997, while some companies report that revenues have jumped 25% in the past year.

The catalysts behind the boom are well-documented. On the one hand, rapid increases in health care costs have forced business owners to corral the amount they can set aside to fund employee benefits. Health care expenses have grown to the point that many companies find it increasingly difficult to offer a full range of benefits and still remain profitable. The squeeze is likely to get worse still.

Whether they like it or not, employers are on the hook to provide the very best benefits – even at today's price levels. That's because in order to compete for the best talent available, they have to offer incentives that include well-rounded dental benefits to complement other programs in health and life coverage.

Here, voluntary benefits plans represent a great solution: They help management successfully leverage a company's buying power to secure an attractive choice of benefits. They also help cash-strapped firms to pass along some of the increasing cost burden of health care to their workforce. What's more, they allow employees more coverage options.

Unique drivers

While the current benefits landscape has fueled extraordinary growth in voluntary benefits as a whole, a unique set of factors has driven the popularity of voluntary dental plans.

Dental coverage is the most popular voluntary benefit offered at the workplace, according to a 2004 LIMRA report entitled Worksite Marketing of Voluntary Benefits.

Many business owners are squeezed so tightly in the current health care cost crunch that they find it difficult to heed employee demand for good, comprehensive dental plans. That holds especially true for small and midsize companies, according to LIMRA.

In a 2004 report, LIMRA reported that 60% of employers with a payroll of 10 to 29 employees did not offer dental coverage. The same poll showed that 30% of the companies polled with 20 to 99 employees were in the same pinch.

For small business, the best solution may be voluntary programs.

LIMRA studies have shown that only 24% of small businesses offer voluntary benefits in addition to group plans. That figure shrinks to 13% for the percentage of small firms that offer voluntary programs alone.

There is some very good news to report, however. In a 2006 report, Serving Up Small Business, LIMRA found that within the next 2 years 23% of the survey participants hope to add dental coverage to their benefits package.

LIMRA surveys have indicated that one of the primary reasons that penetration numbers are so low is the fact that small company bosses simply have not been approached by producers.

Consumer choice

In our diverse American workplace, the one-size-fits-all solution of group insurance plans has some limited appeal. The operative word, however, is "limited."

These days, consumers are looking to tailor plans to their own needs and the needs of their families. Aging baby boomers, after all, have demands that differ from those of a single-parent household or from those of a couple raising a new family. Each household is likely to have its unique preferences and hence gravitate to its own coverage solutions.

Allowing employees a wider array of choices can actually work to provide companies – and families – substantial savings. Surveys show that employees appreciate having a greater say in mapping out individual or family coverage schemes. And by handing over more choice and more responsibility to workers, management can not only keep company costs in check, but still provide large discounts to workers, too.

Providers play an integral role in the development of the voluntary market by providing competitive networks, products, services and programs that can help brokers distinguish themselves with benefits decision makers and ultimately with employees. Examples include:

o Comprehensive preferred provider organizations networks. The larger an insurer's PPO network, for instance, the greater the selection of dental professionals there are for members to choose to deliver basic maintenance and preventative care. Employees benefit from having a wider range of options and can benefit from treatment and procedural discounts available from in-network practitioners.

o Choice plans. Plans should enable brokers to custom-build to a client's price point and value equation with a wide selection and the ability to mix-and-match plan designs to accounts of all sizes.

o Rollover plans. It only makes sense to reward members for their prudent use of their annual benefit allotment. Under rollover coverage, employees can stockpile their annual maximums to help pay for more expensive procedures at a future date.

o Innovation leadership. Until perhaps 5 years ago, dental benefits rarely changed. Thanks to medical science, a lot of fascinating innovations are springing up that improve dental hygiene for patients and help control the lifelong costs of dentistry for members as well.

Dental implants are a good example of this. Not long ago, implants were seen as a cosmetic or optional procedure. With time, the dental profession has shown that what seemed to be a discretionary procedure actually has long-term value. Insurers that offer dental implant coverage as part of their standard package are leading the pack in innovation. The healthier our members' teeth, the lower costs are for everyone.

o Quality service. Carriers should be committed to continuous improvement and benchmark customer service and have high customer satisfaction rates. They should also provide product and service discounts and free ancillary services.

The voluntary market is quite large and ready to be tapped. In a time of cost constraints, dental providers that are innovative, flexible and committed to client service and choice will be successful in working with brokers and other producers to make even greater inroads in this important arena.