The continual increase in health insurance costs, coupled with new standards under the Affordable Care Act, has given producers in the benefits space plenty of cause to worry. Employers with fewer than 50 full-time workers are not required to provide health insurance, and for many, the most feasible solution is dropping coverage altogether.
However, that doesn’t mean employers are abandoning their benefits broker. Instead, they’re shifting their attention from the more costly health insurance policies to dental, vision and long-term care benefits.
“We’ve actually seen—and a lot of other agents have seen—that employers dropping health insurance are trying to offer more ancillary products,” said Boise-based agency owner Scott Leavitt. “They still want to give something to their employers, so we’re seeing an increase in the dental marketplace.”
While they can’t make up for losses in health insurance sales, Leavitt’s dental sales have boomed in the past two or three months as his clients look to more traditionally low-cost packages. That means he’s separating health and dental, and instead pairing dental with other coverages like vision.
“They’re just trying to keep their employees happy, and these are low-cost options separate from health insurance,” Leavitt said.
Dental sales are also increasing as a voluntary product for employers, who then pass the cost on to workers through a payroll deduction.
Colleen Callahan, an agency owner in the Bay Area, is hesitant to recommend dental as a voluntary coverage, however. She believes the low levels of coverage under voluntary plans don’t pay off for commercial clients and their employees.
“Voluntary coverage is a problem because the rates are typically higher, knowing that the people who participate don’t have a piece of the pie,” Callahan said. “There are also some issues with the confusing level of coverage under dental voluntary plans, which often isn’t enough.”
Roughly 80% of voluntary sales are dental coverage, with a projected 2% increase in 2014, Towers Watson found in its 2013 Voluntary Benefits Survey.