Every broker knows that cross-selling additional employee benefits can be lucrative. But sometimes it makes more business sense—for both the client and the broker—if certain benefits are sometimes sold separately.
A good case in point is dental and vision benefits. Typically the two products are paired together, but there are instances where it’s much more prudent to offer one or the other, brokers say.
When offering both vision and dental on a voluntary basis, Kelly recommends that employers put in place premium-only plans.
“There’s a tax advantage for both the employer and employee and the employee can’t elect in or out anytime of the year,” he says. “This may get you better underwriting because employees have to stay in the plan for an entire year and can’t opt out after getting services.”
There are also potential pitfalls and costs to unbundle, Tikia says. The employer can experience problems with one of the plans which may result in hidden costs for a replacement plan, or they might lose the discounts on the bundled plan if a change is made, or even result in variations in benefits and costs with a carrier change.
Moreover, unbundling may increase participation in one plan, but vice versa, decrease participation in another, resulting in adverse selection, she says.