Dental, Medical, Vision: Choosing the Best Medical Benefits Combination

Months before open enrollment makes its annual debut, employers are deciding what benefits packages to renew, reduce, expand, or overhaul to offer employees their pick of health plans. The nagging question for employers, especially small and medium-sized businesses, is how to provide employees with the medical coverage they want while controlling spiraling benefits and healthcare costs? One way is to offer a comprehensive or all-inclusive plan — typically a medical-dental-vision combination — at a discounted price.

As United States employers prepare for open enrollment, providing an array of benefits that employees want and are willing to buy or cost-share becomes a chief concern. According to Mercer, a benefits and healthcare firm, medical coverage costs businesses on average about $12,229 per employee. When combined with wages and salaries, benefits help make up an organization’s biggest expense — employees’ total compensation.

This high price tag can be a pain point for small businesses, but they don’t have to let their size or budget keep them on the sidelines; combining medical coverage with ancillary benefits like dental and vision is a cost-saving option in healthcare coverage. Insurers are bundling health plans and packaging and selling them at discounted rates. Bundling is a marketing concept; insurers found inspiration from cable companies who offer TV, Internet, and phone packages for less than what they say consumers would normally pay for each service.

This high price tag can be a pain point for small businesses, but they don’t have to let their size or budget keep them on the sidelines; combining medical coverage with ancillary benefits like dental and vision is a cost-saving option in healthcare coverage.

Bundled plan choices

A bundled healthcare plan can include various combinations of benefits, such as:

• Basic medical, dental, and vision coverage
• Medical, dental, and vision with life and disability benefits
• A fixed indemnity health plan with a short-term health benefit, or
• Critical illness coverage with a high deductible plan

According to healthinsurance.org, multiple benefits within plans are designed to complement each other.

Bundled plan drawbacks

Like bundled cable services, combined health plans can have drawbacks. Employers should be aware of these “red flags”:

• First-year plan savings sometimes result in high second-year rate increases
• Bundled plans may camouflage the actual costs of separate plans, making any real savings undetectable
• Plan details may include hidden stipulations or conditions, such as waiting periods before employees’ coverage kicks in
• Health plan combinations can have higher deductibles than what employees would normally pay for a stand-alone dental or vision benefit
• Price differences between similar plans may indicate the absence of benefits in some packages
• A policy switch or cancellation could lead to a premium bump
• Offering upscale health plans could trigger a 40% excise or “Cadillac” tax on health coverage that exceeds a certain dollar amount under the Patient Protection and Affordable Care Act (PPACA or ACA)

Plan considerations  

Employers may sponsor health plans to bolster productivity or maintain workforce wellness, but employee demand and retention are the key drivers of today’s benefits and perks. To offer the right choices — medical, voluntary, bundled, or à la carte — companies should know what workers want.

Staying healthy is crucial. Thus, it’s no surprise that medical coverage tops the list of must-have benefits for workers across job categories and industries. A 2018 survey by lens manufacturer Transitions Optical found that employees ranked medical, dental, and vision coverage as their top benefit choices. And in an Anthem, Inc., study released the same year, 73% of participants cited dental coverage and 62% cited vision as the ancillary health benefits they consider in accepting a job offer.

The Society for Human Resource Management found that more than half (56%) of U.S. adults polled in another 2018 survey were more likely to stay with their employer if they liked their health plan.

All 3 studies show that healthcare plans can be effective talent attraction and retention tools. This is especially true for SMBs competing against big and midsize firms for skilled job hunters. But despite employees’ benefit preferences, employers must find the most affordable, highest quality healthcare plans for their business. That may require workers who need special coverage, such as cancer disability or critical care, to purchase such policies independently.

What to understand and review

Before considering any healthcare plan or plan changes, employers should:

• Understand and comply with the ACA’s tax provisions
• Review insurers’ plan designs carefully for possible hidden costs, restrictions, exclusions, and conditions
• Know the cost of changing a plan’s provisions, and
• Factor into any plan offerings the possible impact of COVID-19

ACA cost savings 

A bundled health plan is just one possible cost-saving option for SMBs. For instance the ACA allows SMBs with up to 100 full-time equivalent employees to purchase private insurance through their state’s Small Business Health Options Program marketplace. The Center for Consumer Information & Insurance Oversight provides SHOP enrollment instructions and plan information on its website.

The ACA also offers a tax incentive for SMBs that could help with comprehensive healthcare coverage costs. The Small Business Healthcare Tax Credit offers a 50% reduction in premiums for SMBs and a 35% reduction for small tax-exempt employers.