Special Report: Vision and Dental Benefits — More to See, More to Chew On

Since the Affordable Care Act was passed in 2010, many employers have escalated cuts in benefits, instituted high-deductible health plans and moved employees to the private exchange to shift the rising cost of health care onto their employees. 

With the PricewaterhouseCoopers Health Research Institute predicting that in 2015 the price of health care will increase 6.8 percent for employers, there are seemingly few options available to control their benefits costs.

But with dental and vision benefits, employers have the opportunity to offer some relief — as well as a bright smile, a new pair of spectacles and some hidden health benefits. 

According to the Segal Group 2015 Health Plan Cost Trend Survey, trends for dental coverage costs are expected to climb steadily at 4 percent in 2015, while vision plan costs are expected to dip below 3 percent in the coming year. This dental and vision coverage is stand-alone and separate from any coverage a comprehensive health plan might provide.

Unlike the cost of medical care, which is driven up with the arrival of new treatments and ways of managing care that better align with the Affordable Care Act’s mandates, dental and vision benefits have remained somewhat insulated from such inflation, said Vinny Graziano, vice president of Segal Consulting, an independent benefits, compensation and human resources consultancy headquartered in Chicago.

“In terms of inflation, medical is still the biggest chunk of the benefits pie,” Graziano said. “When it comes to dental and vision, it’s pretty much renew it and put it in place again. There is not as much energy, thought or focus given to it because the medical side is so demanding.”

MetLife Inc.’s 12th annual U.S. Employee Benefit Trends Study released at the end of 2014 found that when employers were asked to cite issues that they find “very challenging,” understanding the effects of the Affordable Care Act ranked second, with 49 percent of employers citing it as a top concern.

The relatively low cost of dental and vision plans means that continuing to offer coverage should be a no-brainer.

The Henry J. Kaiser Foundation’s 2014 Employer Health Benefits Survey of 2,052 firms of small and large size found that 53 percent of companies offering health benefits offer or contribute to a dental insurance plan for their employees that is separate from any coverage the health plans might include. This number has held steady since 2012.

The same study found that 35 percent of surveyed firms offer or contribute to a vision benefit plan for their employees that is separate from the health care plan the company offers. This is up from the 17 percent of employers who offered vision benefits in 2012.

“An aging workforce would indicate a greater need for vision correction,” said Lukas Ruecker, president of EyeMed Vision Care. “We also know that blue light from tablets and other mobile devices can increase the risk for macular degeneration, so the need for annual vision exams and correction will continue to increase.”

“I think employers look at dental and vision benefits with a sense of relief,” Graziano added. “Dental only went up 4 percent this year. They can use the same strategy. They don’t have to cut benefits. It means they don’t have to kick employees one more time. It’s a small part of the overall picture with a big impact.”

Graziano’s characterization of dental and vision benefits at a low cost as “not a beating” is viewed as an understatement by others in the industry. The positive effect the coverage has on employees’ overall health and productivity makes it worthwhile for employers to find a way to continue to offer the benefits.

Dental (and Vision) to the Rescue

Even though offering these benefits is not a significant cost to employers, the effort is appreciated by their employees. According to the MetLife benefits trend study, vision care insurance was the most popular voluntary benefit among employees (health care coverage was not listed as a voluntary benefit in this survey), with 71 percent indicating an interest.

A 2014 Society for Human Resource Management study on vision care found that 83 percent of employees who were offered vision coverage by their employers chose to enroll in 2013 compared with 78 percent in 2012.

After medical coverage, dental benefits are the most frequently selected benefit, according to Tom Palmer, senior vice president of sales and service at United Concordia Dental Cos. The MetLife benefits trend study also found that 76 percent of employees report that they would be interested in voluntary dental insurance if their employer offered it.

High demand and enrollment rates indicate that benefits managers are providing a service that employees appreciate, which is part of the goal. But in addition to keeping employees happy, these benefits are keeping them healthy in unexpected ways.

An eye exam, for example, is the first line of defense for several chronic diseases.

“Preventive vision checkups can help discover and treat potential issues such as diabetes and hypertension earlier and at a lower cost than having the disease diagnosed by a physician on an employee’s medical insurance plan,” said Alan Hirschberg, vice president of MetLife. 

Broken blood vessels in the retina are an indicator of diabetes. That kind of bleeding usually signals that a buildup of sugar in the patient’s bloodstream has begun to break down the capillaries that feed the retina. Elevated blood-sugar levels are a warning sign of diabetes.

Catching the disease at this early stage translates to dollars saved for employers. According to the Vision Council, the representative body for the manufacturers and suppliers in the optical industry, employers can gain as much as $7 for every $1 spent on vision coverage. This translates to $8 billion saved annually in lost productivity for the treatment of chronic illnesses, according to the council.

Dental coverage yields similar results. An article published in the Journal of Periodontal Research found that high glucose levels often result in a higher instance of gum disease, so catching the oral issue early on can help prevent further health complications.

“You can’t be truly healthy without good oral health,” said Dr. Bill Kohn, vice president of dental science and policy at Delta Dental. “There is more and more of a recognition that oral health is part of overall health, and that’s true no matter how the benefit is offered.”

Even though the Affordable Care Act targets the provision of medical benefits, employers must still consider the legislation when constructing their dental and vision benefits plans. 

The ACA does not require employers to provide either dental or vision benefits to their employees. However, pediatric dental and vision coverage are a part of the legislation’s 10essential health benefits that must be provided by all health plans.

If an employer chooses to offer dental and vision benefits, it can be done in one of two ways, said Melissa Larkin, director of national sales support at Delta Dental. The choice employers make has a significant effect on both cost and quality of coverage.

The first option is for an employer to embed a dental or vision plan within its health insurance plan. Employees will pay a single monthly premium that includes all services, Larkin said.

While a packaging approach may seem convenient, it is not always beneficial to employees. An embedded approach requires employees to hit a large medical deductible, sometimes upward of $5,000 before any dental benefits can be received, Kohn said. 

“That’s a big concern when you’re talking about embedding into a medical plan,” Kohn added. “Employees aren’t always clear on how the deductible is handled, so they end up being surprised when dental work is not covered.”

In addition, folding dental and vision into a medical plan means these plans have the potential to become subject to the excise tax, commonly referred to as the “Cadillac” tax, that will go into effect in 2018. Dental and vision add to the premium total and may end up requiring some employers to pay the 40 percent tax rate, Larkin said. 

By far, the more popular option is for an employer to offer dental and vision benefits as stand-alone options that exist outside of the medical benefits package. If the stand-alone option is chosen, the ACA legislation does not apply, and dental and vision coverage does not count toward an employee’s medical deductible, Kohn said.

“There is no deductible involved, so with the first dollar the employee is getting his benefit,” Kohn said. 

Employers should also know that moving their employees to high-deductible health plans or shifting them to the private exchange will not affect access to quality stand-alone dental and vision benefits.

“I haven’t seen a decrease in uptake on dental on the private exchanges,” Larkin said. “It’s kind of the opposite, actually. There isn’t an adversity to the benefit once you go out to the private exchange. It’s taken just as frequently as it is on a traditional benefit setting.”

According to Palmer, high-deductible plans and private exchanges will continue to make dental and vision a viable option to employees.

“Employees have deemed these products important,” Palmer said. “If employers give them X amount of dollars to spend on coverage, they will continue to buy into dental and vision plans.”