An increasingly voluntary benefit

Twenty years ago, many employers began offering workers vision coverage, part of a continuing effort to recruit and retain the best people. Back then, employers typically picked up the entire premium, at least for the employee and sometimes for employee families are well.

Now, by contrast, firms are moving toward voluntary enrollment and an arrangement that has employees participating in at least some of the costs.

“That's a trend we've seen accelerate over the last several years,” says Melody Healy, senior vice president for product strategy and integration at VSP Vision Care in Rancho Cordova, Calif. “Employers are looking for options. They want to be able to provide some level of benefit, but they may not be able to afford to 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 so much on employee medical insurance, which has seen steep, persistent cost increases.

But many firms are still willing to pay as much as they can for vision, because it helps them stay attractive to potential and current employees, says Shannon Enders, a partner at Lakeshore Employee Benefits in Norton Shores, Mich.

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

Vision coverage also is important as a part of overall medical wellness programs, adds Karen Gustin, senior vice president for group field sales, national accounts, and broker blocks at Ameritas Life 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. No one 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 that comes without any sense that the employer is overstepping its bounds.

No one does good work when she can't see, of course, so vision coverage boosts productivity. Vision care, as part of overall wellness, also benefits employers' bottom lines, because vision exams can spot diabetes, high blood pressure, cancer and various other ailments before they become life threatening—and much more expensive.

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

Voluntary and popular

Despite voluntary benefits' reputation for being a lot of work for little return, voluntary vision coverage is typically a popular product.

“We see very solid sign-up and participation in our plan—35 to 50 percent participation,” says Kevin Hilst, who is senior vice president 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 for an upgraded product. “We've gone through claims history to find that consumers will pay more for greater value,” he says.

When offered Eye Med's three-tier plan, customers buy up to a more 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 employee benefits agents don't sell voluntary. That was 15 years ago,” he says. “Employers are tapped out right now because of the cost of medical coverage. But the employees are not tapped out, and if they'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 to better plans.

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

Smaller employers typically offer just one plan, upgrading it when that seems appropriate. Larger employees might offer more than one 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 of our employee groups are under 100, and multiple options more common in groups of ten thousand or so.”

Surviving in a world of exchanges

The coming public exchanges will require that all medical plans include coverage for pediatric vision needs; public exchanges may also exclude ancillary plans. Some vision coverage providers see this as a potential problem, worrying that medical providers will simply add vision coverage to all policies, leaving little market or accessibility for standalone vision plans.

“This coming October's health care reform is the biggest challenge ahead,” Hilst says. “We want to see the impact on our industry, on brokers, and on how employers treat benefits. There's no doubt that public and private exchanges will change the way healthcare gets distributed.”

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

“That's where we'll make sure that we leverage our health plan partner relationships to get ourselves into the marketplace,” Hilst says, adding that the federally mandated pediatric benefit will likely expand the number of people who need eye exams. “Partners are looking for providers for that piece of the coverage,” he says.

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

VSP Vision Care also sees the exchanges as “a fabulous opportunity for us,” Healy says. “It means new market opportunities. We want to make sure we have diverse products and services available.”

Some of those products and services will likely appear on markets outside the exchanges—because the exchanges may not include ancillary coverage, but also because market professionals still see a 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 deductible before they get help buying lenses or frames, she says. “You'll get help paying for vision sooner with standalone vision coverage.”

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

An employee's husband might have great medical coverage but no vision coverage, for instance, so the worker would want to enroll just herself in her company's medical plan, but herself and her husband in the firm's vision plan. A standalone product allows that configuration, but a product that combines medical and vision coverage would not.

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

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

“The exchanges are confusing at best, and if we can alleviate that confusion for our employees, this is a small price to pay.”