As successful benefits brokers understand, business clients are looking for solutions to problems, not products to buy. And the problem most are trying to solve today is containing costs while helping their employees gain access to affordable benefits that meet an increasingly diverse workforce's unique needs.
That challenge is taking on ever-greater urgency as small and mid-sized employers confront the following circumstances:
- The cost of basic health coverage continues to rise at a pace usually much greater than the company's gross revenue or bottom line;
- In many parts of the country, labor markets are relatively tight, so employee benefits remain a critical tool used to recruit and retain good workers; and
- As employees continue to assume a growing share of the responsibility of paying for health coverage and other benefits, they have higher expectations in terms of the range of choices available to them, as well as the creativity and flexibility of the benefits design.
Creative solutions
In addition, brokers themselves, as they strive to become more valuable as consultative problem-solvers for their clients, need a greater variety of tools in their kits to help business clients respond to these critical forces.
Thus, the challenge exists for insurance carriers and other benefits suppliers to come up with creative solutions.
Ancillary employee benefits -- particularly dental and vision products -- have become one source of creative product development -- and sales opportunity for brokers. That's because for years ancillary products, when offered by employers, often were a nice little extra, living in the shadow of the basic medical plan.
Today, given the consistent steep upward march of basic medical plan costs, ancillary plans can be a source of good news, in the form of strong value for dollars spent.
"Employers respond very positively to innovative products that are easy for the members to use, but also give the employer the feeling that they're getting bang for their buck," notes Kevin MacKay, a seasoned Cleveland-area broker who works extensively with small and mid-sized employers.
"Medical is still the hot button," he adds. "But once you've got them set on the medical side, you go to work on the ancillary.
MacKay says he's bringing in new clients almost daily as a result of attractive ancillary products he has been able to present to them.
At the same time, the increasing sophistication of dental and vision services, now demands -- and is inspiring -- equally sophisticated and flexible insurance products to accommodate the new emerging market reality.
Also, it should be noted that employers have compelling business reasons -- over and above an expected basic human concern for employees' welfare -- to see workers are not being discouraged from seeking good dental and vision care on the basis of affordability.
A study by the Eye Disease Prevalence Research Group, for example, predicts that by the year 2020, the number of Americans age 40 and over who suffer from low vision and blindness will rise by a whopping 67 percent, to 5.5 million.
The study reinforces the critical importance of annual comprehensive eye examinations in preventing and/or delaying eye diseases, as well as diabetes. The workplace productivity impact of eye disease and diabetes perhaps goes without saying.
Role of creativity
So where does creative product design fit into this picture? In the realm of vision products, some carriers enable employers who already offer a dental benefit (but no vision benefit) to give employees access, through large existing provider networks, to discounted vision exams, contact and eyeglass lenses, frames and other products.
Since group vision benefits are still relatively uncommon and therefore most employees are accustomed to paying full retail prices for products and services, the "free" benefit of access to discounted networks can be perceived as a valuable benefit indeed. (Network discounts on vision products and services are typically in the 15 percent to 20 percent range, and often higher.)
In addition, access to such networks can be made available to employees without co-pays, deductibles or ID cards; they simply pay discounted bills directly to the providers. Thus employers are able to make this benefit available to employees without adding to their own administrative burdens.
But since such programs are offered as an add-on to an existing dental benefit plan, brokers and employers must be satisfied with the value, quality and flexibility of the dental plan itself. The good news there is that progressive carriers have been enhancing the designs of their dental plans.
Beyond use-it-or-lose-it
One illustration, dental rollover accounts, are now available that allow employees to escape the restrictive use-it-or-lose-it financial trap of traditional insurance products. These rollover plans let employees hang on to a portion of their unused annual dental benefit accumulations, rewarding long-term employees and encouraging the fiscally prudent use of dental benefit dollars.
Accumulations in rollover accounts can provide a significant financial benefit when an employee requires a major dental procedure. (One carrier, for example, began offering such a product, known as the "Maximum Rollover Account," in 2004 to groups with as few as 10 members; brokers indicate it has helped them open doors.)
An additional example of the kind of creative dental product designs that create sales opportunities for brokers and value for small and mid-sized employers is one allowing plan members to switch, as often as monthly, between a carrier's dental PPO and HMO plans. While one might expect underwriting considerations to preclude that degree of flexibility, such a product exists, and is generating business for the brokers who offer it.
Yet another example is a dental plan that covers implant procedures, instead of merely covering conventional bridges. Interestingly, the dental insurance industry as a whole has taken its time to update policies to reflect the dental profession's shift to implants. But some carriers do indeed now cover dental implants.
There is always a risk for insurance companies, however, of going overboard in offering a rapid stream of new products. New doesn't mean creative, or, for that matter, useful.
Brokers are often the source of excellent market-sensitive new product ideas. Insurance carriers should take advantage of their where the rubber meets the roa perspective. But carriers have to balance between product designs and cost concerns. One example where there can be a bump in the road is the idea of full coverage of dental cosmetic procedures. Full coverage for cosmetic procedures sounds great, but could pose significant financial problems for a carrier if priced affordably, or suffer from low usage if it is too expensive and not priced appropriately in relationship to anticipated claims costs.
In the end, to meet broker and customer needs for creative and useful ancillary benefit group products, carriers must strike a balance between frenetic and ultimately self-defeating new product development, and the we've-always-done-it-that-way stodginess. Some carriers have found that balance. The products are available. Brokers should seek them out.
