Selling dental plans in the age of high benefits costs.
The second most requested form of coverage after medical insurance, dental coverage continues to grow rapidly because of strong demand from members, flexible options for employers, and the relatively low cost for both. In fact, demand for voluntary plans is growing by 15 percent or more annually.
For agents, dental insurance represents an opportunity to add value to clients and their members while generating a stable income stream. The key reason voluntary dental plans are growing faster than medical plans is that their reduced expense outlay and less burdensome administration makes them easier to sell. In comparison with medical insurance, dental coverage has a lower utilization rate and fewer catastrophic and emergency claims, and it is easier to administer from a customer service perspective.
All of this adds up to a revenue stream that is less volatile than medical coverage, which can run aground when budget-busting claims prompt employers to rethink their coverage options. Dental coverage, on the other hand, delivers fewer surprises. Even the more expensive dental claims, such as implants or bridges, cost far less than a complicated pregnancy or a transplant claim.
The growing market for voluntary dental coverage
Many employers still offer employer-paid coverage, but for cost-saving purposes, a growing number are opting for voluntary group plans.
Because the cost is low, agents can make a strong case that employees should pay for this valuable benefit. In addition, voluntary dental provides an opportunity to purchase dental at reduced group rates.
In pitching dental, it's important to note that plan provisions have improved significantly in recent years by allowing unused benefits to roll over. Most people, in fact, don't max out their plans each year. Under some programs, for example, members who used $500 of their $1,000 annual benefit could roll over a portion of the remaining $500 to the next benefit year. Members would then start the new year with a higher maximum. That flexibility provides individuals and families with an opportunity to take full advantage of the benefit.
Interestingly, the sale of dental coverage is often influenced by geography. In the Northeast, employers traditionally pick up a large portion of the cost of dental coverage (although with the escalating cost of medical insurance, that is changing). In the South and the West, on the other hand, there is a higher preponderance of voluntary dental.
Making a strong case
one challenge with voluntary dental is managing the communication and enrollment processes. Since there is an employee cost, members must be certain that the expense is worth the benefit. That requires taking enough time to clearly articulate the benefits of the plan.
In addition to providing effective communication and enrollment support, agents interested in selling dental coverage should:
* Ask the medical carrier if there are discounts for add-on dental coverage and/or multiple lines of coverage.
* Ask the carrier to provide both employer-paid and voluntary quotes for dental coverage. If full employer-paid coverage is ruled out, there is little reason why a voluntary group plan can't be offered to employees.
* Make sure employers and employees fully understand the range of coverage options and features. Does the plan cover oral surgery, oral cancer screenings, dental implants, or bridges?
* Clarify the available network options. Is dental offered by a PPO or a dental HMO (DMO)? Is the benefit in-network only, or is there flexibility to go out of network? those features can have a significant impact on cost.
By helping employers select the right plan for their employees, benefits professionals can lock in a more stable income stream and strengthen their clients' benefits programs while helping them achieve their business objectives.
BY FRANCINE J. YOUNG
Francine J. Young is senior vice president and chief business development officer of Nippon Life Benefits. She can be reached at 212-682-3000.