With the recent news from HHS about the Medical Loss Ratio concerning agent commissions in insurance products, brokers are beginning to understand why they need to have other saleable services in their bag of tricks. It doesn't take a math major to figure out that to make money, you need to provide products that pay you to sell them.
Granted, voluntary benefits are one way to see an increase in your paycheck, but don't rely strictly on major medical insurance or other insurance plans to fill up your quiver when you need all the available arrows you can deliver to clients. In order to survive financially, you need to think outside the box.
Typically, when employees are offered a dental insurance product, many turn it down as a benefit they are willing to pay for, especially if they're part time or a lower wage worker. According to the Minnesota Department of Employment and Economic Development, while 67.3 percent of full-time workers and 14.9 percent of part-time workers are offered some type of employer-sponsored dental coverage, either as a stand-alone policy or as part of their medical plan, only 52.7 percent of full-time workers and 8 percent of part-time workers participate in an employer-sponsored dental plan.
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When part-time workers participate in their employer's dental plan, they are more likely to be participating in single coverage. A bold exception is part-time construction workers, who are much more likely to be participating in family coverage. The greatest exception for full-time workers is in the leisure and hospitality sector where 23 percent of workers participate in single coverage versus 12.1 percent who participate in family coverage.
Overall, the share of firms that provide dental coverage is much lower than the share of firms that offer medical coverage. Only about one in four firms (28.6 percent) offer dental coverage for full-time workers, and only about one in 10 (9.8 percent) offer coverage for part-time workers. Frequency of coverage is highest for full-time workers among manufacturing employers, where almost half (46.5 percent) of firms offer single coverage and 37.2 percent offer family coverage for full-time workers, and lowest among firms in leisure and hospitality (15.2 percent and 14.2 percent for single and family coverage respectively).
Twenty-one percent of manufacturing firms provide dental benefits for part-time workers, but they are less likely to offer family dental coverage for part-timers. Education and health services employers are among the most likely to provide plans for part-time workers.
As with medical coverage, large employers provide coverage more frequently than small employers, although with dental coverage there is an even greater difference between the biggest and smallest size classes for full-time workers. Firms provide single and family dental coverage to part-time workers about as often as they provide medical coverage across size classes, but full-time workers in small and very small firms have a much lower incidence of dental coverage. Among very small firms (less than 10 employees) only about 16 percent of employers offered even single dental coverage for full-time workers.
One major reason that employees don't buy dental insurance is due to the extra cost coming out of their paycheck each month. According to the latest data from the National Association of Dental Plans, Estimated annual dental premiums for 2009 are outlined below as national averages for typical group coverage:
Employee Only (including orthodontia):
DHMO — $19.40 a month–$233 annually
DPPO — $35.02 a month–$420 annually
Indemnity — $30.87 a month–$370 annually
Employee only (without orthodontia):
DHMO — $18.97 a month–$228 annually
DPPO — $28.77 a month–$345 annually
Indemnity — $30.32 a month–$364 annually
Employee & Family (including orthodontia):
DHMO — $63.77a month–$765 annually
DPPO — $99.74 a month–$1197 annually
Indemnity — $104.78 a month–$1257 annually
Now, compare the cost of insurance to a dental discount plan. Discount plans with Careington, Aetna, Health Allies, DentalPlans.com or other companies allow you to visit a dentist and receive significant savings at the time of service with participating dentists including specialists for oral surgery, periodontal work, orthodontia, and more. Payments as low as $10-$15 a month for a family can be found that provide huge savings between 20 percent and 60 percent for most procedures. You pay a discounted rate to the dentist at the time of service, and may end up with a cleaning, a set of X-rays and an exam for under $100 on your first visit. And, you have a fee schedule that tells you in advance what you pay the dentist. How about that – no surprises, and you know how much it costs before you go. There are several advantages for those who use a discount plan:
1.) Nationwide access to providers with no penalty for changing dentists, as in a DHMO 2.) No waiting. You can use your plan immediately with any participating provider. 3.) No limit on the amount of work to be done. You can use your plan as often as you need, and the membership rates will typically never increase for your plan. 4.) The entire household is often automatically included in your membership. 5.) There are no contracts and no forms to fill out at the dentist when you use your plan. 6.) You receive immediate savings at the time of service. 7.) Low monthly membership fees. 8.) Discount plans can be used in conjunction with some insurance plans. 9.) You can use your pre-tax dollars (FSA/HRA/HSA) to pay for procedures. 10.) You can cancel your plan at any time with no penalties.
If employees can afford dental insurance and want to buy it, then you should have no problem selling this type of product to the employer. However, if you are selling to the small business market, or sole proprietors, then you should definitely have a discount dental plan as part of your sales arsenal. You won't be cannibalizing your insurance business, and you undoubtedly will have a second option that is a winning combination of benefits to increase the overall size of participation but also add to your commission income. Those who can afford the insured product will buy it, and those who cannot will likely see the discount plan as an extremely affordable option to help them save money on dental expenses. And, you're the hero when it comes to offering solutions that work and help your client.
Although the commissions may be less per individual participant, in the aggregate, they definitely add to your bottom line. Having multiple options, especially when proposing both insurance and discount plans, shows that you know the value of solution based selling. And, you can add to your overall income by continuing to marry both types of products as a way to help your clients solve their health care dilemmas. Now, go out and sell!
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