Executives at Bailey Lauerman &Associates, an advertising agency in Lincoln and Omaha, Neb., seebig value in offering a vision plan to its employees. Though they're paying for coverage of a single dental and visionplan for its 60 employees, they say it's a small price to pay forkeeping—and attracting—happy and healthy employees. “We use it as arecruiting tool,” says Spencer Peery, the firm's business manager.“We offer some of the best benefits at a competitive price. Thesebenefits keep our employees healthier. They use dental and visioncoverage almost as much as they use health insurance, for bothprevention and general care.”

Bailey Lauerman & Associates offer a single dental andvision plan and pays for employees' coverage. Workers pay $20 amonth to add their families to the plan.

“It's worth it to us to be able to offer that benefit. It's oneof our costs of doing business and keeping employees happy,” Peerysays, adding that the company plans to continue offering the same,standalone vision benefit, even when coverage bought on aninsurance exchange becomes another option.

Peery's firm is simultaneously unusual and very common: unusualin paying the entire premium for employees' vision coverage, butcommon in planning to continue the benefit after the PatientProtection and Affordable Care Act comes fully into effect.

An increasingly voluntary benefit

Twenty years ago, many employers began offering workers visioncoverage, part of a continuing effort to recruit and retain thebest people. Back then, employers typically picked up the entirepremium, at least for the employee and sometimes for employeefamilies are well.

Now, by contrast, firms are moving toward voluntary enrollmentand an arrangement that has employees participating in at leastsome of the costs.

“That's a trend we've seen accelerate over the last severalyears,” says Melody Healy, senior vice president for productstrategy and integration at VSP Vision Care in Rancho Cordova,Calif. “Employers are looking for options. They want to be able toprovide some level of benefit, but they may not be able to affordto cover the whole cost.”

The reason the employer can't afford to pay the whole bill,industry experts say, is typically that it has already spent somuch on employee medical insurance, which has seen steep,persistent cost increases.

But many firms are still willing to pay as much as they can forvision, because it helps them stay attractive to potential andcurrent employees, says Shannon Enders, a partner at LakeshoreEmployee Benefits in Norton Shores, Mich.

“You want to attract and retain people, and if you have a $1,000deductible on your medical plan, you might as well have a $1,500deductible and a vision plan. That's more attractive to employees,”he says.

Vision coverage also is important as a part of overall medicalwellness programs, adds Karen Gustin, senior vice president forgroup field sales, national accounts, and broker blocks at AmeritasLife Insurance Corp., which is based in Lincoln, Neb.

Weight-loss and smoking-cessation programs can be a tough sell,she notes, “because it can seem like the employer is meddling. Noone wants to hear that they're fat or should stop smoking.”

An opportunity to get one's eyes checked, on the other hand,sounds and feels more like a chance for personal wellness—one thatcomes without any sense that the employer is overstepping itsbounds.

No one does good work when she can't see, of course, so visioncoverage boosts productivity. Vision care, as part of overallwellness, also benefits employers' bottom lines, because visionexams can spot diabetes, high blood pressure, cancer and variousother ailments before they become life threatening—and much moreexpensive.

That helps self-insured companies keep direct costs down andalso helps fully insured firms reduce premium increases.

Voluntary and popular

Despite voluntary benefits' reputation for being a lot of workfor little return, voluntary vision coverage is typically a popularproduct.

“We see very solid sign-up and participation in our plan—35 to50 percent participation,” says Kevin Hilst, who is senior vicepresident for sales and account management at Eye Med in Mason, OH.“Consumers see value in what we offer.”

In fact, Hilst says, employees are even willing to pay more foran upgraded product. “We've gone through claims history to findthat consumers will pay more for greater value,” he says.

When offered Eye Med's three-tier plan, customers buy up to amore expensive plan 65 percent of the time. 

Enders is a little surprised to find himself agreeing.

“I was an anti-voluntary guy, thinking that real employeebenefits agents don't sell voluntary. That was 15 years ago,” hesays. “Employers are tapped out right now because of the cost ofmedical coverage. But the employees are not tapped out, and ifthey're going to get their teeth cleaned or get their eyes checked,this is a real benefit for them.”

Enders has also seen employees' willingness to trade up tobetter plans.

“A growing number of plans have different levels of benefits,allowing more frequent exams and more expensive frames on thehigher end,” he says. “I try to get in on the benefit and thenbring in the higher levels once they're a few years in.”

Smaller employers typically offer just one plan, upgrading itwhen that seems appropriate. Larger employees might offer more thanone vision plan.

“We've actually done more upgrading than offering a plan menu,which I think is typical for our group size,” Enders says. “Most ofour employee groups are under 100, and multiple options more commonin groups of ten thousand or so.”

Surviving in a world of exchanges

The coming public exchanges will require that all medical plansinclude coverage for pediatric vision needs; public exchanges mayalso exclude ancillary plans. Some vision coverage providers seethis as a potential problem, worrying that medical providers willsimply add vision coverage to all policies, leaving little marketor accessibility for standalone vision plans.

“This coming October's health care reform is the biggestchallenge ahead,” Hilst says. “We want to see the impact on ourindustry, on brokers, and on how employers treat benefits. There'sno doubt that public and private exchanges will change the wayhealthcare gets distributed.”

At Eye Med, Hilst says, the firm wants to participate in thepublic exchanges, though it doesn't expect standalone vision plansto be offered there.

“That's where we'll make sure that we leverage our health planpartner relationships to get ourselves into the marketplace,” Hilstsays, adding that the federally mandated pediatric benefit willlikely expand the number of people who need eye exams. “Partnersare looking for providers for that piece of the coverage,” hesays.

Even so, the company plans to stay flexible. “We still see aplace for voluntary benefits. When open enrollment starts inOctober, we'll get a sense of how we need to react. We might needto look at developing different product sets, developing differentdistribution sets, and finding more partners to participate on someof the exchanges,” Hilst says.

VSP Vision Care also sees the exchanges as “a fabulousopportunity for us,” Healy says. “It means new marketopportunities. We want to make sure we have diverse products andservices available.”

Some of those products and services will likely appear onmarkets outside the exchanges—because the exchanges may not includeancillary coverage, but also because market professionals still seea market for the kind of vision coverage employers offer now.

“I think more people will have double coverage,” Gustin says.Medical plans may require that participants meet a deductiblebefore they get help buying lenses or frames, she says. “You'll gethelp paying for vision sooner with standalone vision coverage.”

Moreover, Enders says, “Not every employer wants to say thatyour medical selection has to mirror your coverage on medical anddental.”

An employee's husband might have great medical coverage but novision coverage, for instance, so the worker would want to enrolljust herself in her company's medical plan, but herself and herhusband in the firm's vision plan. A standalone product allows thatconfiguration, but a product that combines medical and visioncoverage would not.

At the end of the day, many employers may be like BaileyLauerman & Associates, which plans to prioritize simplicity andclarity. After PPACA is fully in effect, Peery says, the companydoesn't plan to ask its employees to shop for coverage on theexchanges. Instead, Bailey Lauerman & Associates will continueproviding the same vision insurance it has offered for the past 12years.

“We've always felt that we've received good service from ourexisting plans, and I don't see us ever going to the exchanges.Doing it this way is a less confusing experience for employees andless work for them—they sign up once a year and that's it. Someoneelse does the paperwork,” Peery says.

“The exchanges are confusing at best, and if we can alleviatethat confusion for our employees, this is a small price topay.”