By James Farley
It always amazes me that benefit advisors will tell a plan sponsor that they should self insure their medical plan in order to save money and then turn around and sell that same plan an insured dental and/or vision plan.
To begin with, there is REAL RISK in a medical plan in the form of multi-million dollar claims while there is a plan cap on expenses of dental and vision measured in hundreds of dollars. In addition, the risk is limited by the number of teeth in anyone’s mouth. No plan sponsor is not going to be financial broken or even financially dented by dental bills. At worst, the might be a small “ding”. There is no need for stop loss coverage.
Advisors will sometimes point to the availability carrier dental or vision network as the reason for insuring such a plan. These are the same advisors trying to convince plans about the evils of the carrier network in the medical plan. The way dental claims occur, the network isn’t worth much savings. Most partipants either have a cleaning and exam only which aren’t very expensive or a bill that exceeds the annual maximum which makes the network discount irrelevent. Further, most dentists aren’t in most networks.
A few advisors will admit they like selling insured dental and vision plans because they like the compensation and the overrides. These same advisors are critcizing the BUCAs and traditional brokers for the levels of commissions, overrides, and other hidden compensation.
The fact is the dental and vision plans are riskless and easy to administer. The MLR equivalent on a dental plan is running in the 30-40% range. Self insuring with excellent advisor compensation will probably be less than 15%. The savings from self insuring dental and vision is as or more meaningful to most employer plans as many point solutions being recommended by most advisors today.
This is available to all size groups. It shows plan sponsors their advisor is really paying attention