Not All Eyeglass Frames are Created Equal
Most companies’ strategic goals include attracting and retaining employees and keeping them healthy and productive. But what’s the best way to succeed in a changing healthcare marketplace?
For many organizations—especially those that fund their own healthcare plans—the answer lies in ancillary benefits. Such offerings, which often include stand-alone vision and dental care, are becoming healthcare game changers in an increasingly complex marketplace.
The Affordable Care Act (ACA) established healthcare exchanges, providing multiple new ways for companies to secure benefits. Today, companies can choose to use a public or private exchange—or continue to purchase directly from an insurance provider—based on their specific needs. That flexibility comes in handy for companies that, for example, want to streamline medical coverage through an exchange but are looking to fill in coverage gaps by purchasing benefits like vision directly.
Whether companies choose to purchase through an exchange or directly, the important thing is to make sure your benefit package is complete. Doing so can offer some significant advantages for both companies and their employees. For example, companies are able to attract and retain employees with a rich benefits package. At the same time, these ancillary benefits also offer hidden value. Many systemic conditions are detected first through vision and dental examinations. A 2013 study by Human Capital Management Services, Inc. (HCMS)1 found that 62 percent of the time, doctors for vision-care provider VSP Vision Care detected signs of high cholesterol before other healthcare providers recorded the condition.
Additionally, VSP early detection rates were 34 percent for diabetes and 39 percent for hypertension. The study also showed that the patients identified through an eye exam entered the health care system with fewer complications and co-occurring illnesses, and experienced lower rates of inpatient admissions and emergency room visits. The study also verified that keeping these employees healthier reduced absenteeism and turnover while increasing productivity while at work.
The HCMS study found that for every initial $1 spent by clients on exam services, they saved $1.45 in improved productivity and reduced healthcare costs over a four-year span. This translates to a 145 percent return on the initial dollar investment. The total savings of the six companies in the study over four years was $13.1 million.
It’s no surprise, then, that more and more companies have begun to add ancillary products to their benefits mix. In fact, since 2008 the number of companies offering such products has doubled.
Not all ancillary plans are created equal, though. It’s important to find a benefits partner that can deliver the products and services that companies and their employees care about most. For example, delivering on consumer priorities like low out of pocket costs and the ability to personalize their benefit help drive satisfaction and utilization, which in turn, helps employers attract and retain top performers – and keep them healthy and productive.
1Human Capital Management Services, 2013 Study of VSP Eye Health Management Program
It’s a common scenario: A medical insurance carrier wants to sell your company a medical coverage plan that is partly paid by your employer. The carrier’s sales representative, sensing your company’s price sensitivity, attempts to sweeten the deal by offering a 1% reduction in your company’s medical premiums. Sometimes this can be as much as the vision premium.
But there’s a catch. The vision coverage is employee-paid. So the medical plan which is partly employer-paid, is being subsidized by the vision plan that is 100% financed by your company’s employees.
This deal is too good for any company to pass up, right? Not so fast. The truth is, a bundled deal such as the one above may not only cost employees more money, but may also leave your company open to legal challenges.
At first glance, bundling your vision may seem to make sense. Your company receives a discount on medical coverage for the first year. The promise of easier administration also seems tempting. What you may be overlooking, however, are several long-term considerations.
First, bundling may result in a considerable cost shift to employees from employers, which, if not communicated properly, can result in a violation of the Employee Retirement Income Security Act (ERISA). The Act deems those who have control over a plan or its assets to be fiduciaries that must act solely in the interest of plan participants. If a company reduces what it pays for medical benefits at the expense of increasing its employees’ vision costs, it may be violating its fiduciary responsibilities by engaging in ERISA-prohibited transactions. Furthermore, the implicit subsidy of company medical costs may open the fiduciary to personal liability for the breach as well as the prohibited transactions taxes.
Possible legal jeopardy isn’t the only reason to beware of bundled plans, however. Historically, such plans have much lower enrollments than stand-alone plans. Lower enrollments mean fewer health screenings for employees, which in turn lead to lower rates of detection of chronic diseases. The result is a higher overall cost to employers, who pay dearly in the form of increased medical expenses. After the first year or so, the medical plan discounts disappear, resulting in still higher ongoing costs.
If a bundled plan isn’t the answer, what is? The best practice for most employers may be stand-alone coverage that safeguards both employees’ health and an employer’s bottom line. Choose a consumer-oriented provider that offers a plan that will maximize your enrollment and reduce expenses for your employees.
Most important, before committing to any plan, ask for an out-of-pocket cost comparison to understand the real impact the plan will have on your employees. In the case of vision-care, for example, out-of-pocket expenses can account for approximately 70 percent of a plan’s price tag. Ultimately, your organization should thoroughly explore whether a bundled package truly meets its needs. Take a second look. You may be glad you did.
When Newkirk Electric, an industrial electrical contractor in Muskegon, Michigan, surveyed employees two years ago about what they wanted in their healthcare package, they spoke decisively: vision care.
More than half of the non-union workers at the 500-employee company responded that they wanted a vision plan—even if they had to pay for it themselves.
The company heard the same story from those they were trying to recruit. “At the new-hire level, potential employees were disappointed at the lack of vision and dental,” says human resources coordinator Valerie Lundholm. “They didn’t seem to care that we paid the entire cost for their medical; they wanted the vision and dental products available as well.”
Newkirk responded by adding a voluntary plan that not only satisfied their employees but also eliminated some administrative headaches. They didn’t want to complicate the open enrollment period, so they adopted a stand-alone vision insurance plan that allowed them to enroll employees in the middle of the year. According to Lundholm, administering the vision plan off-cycle was a breeze because it wasn’t during the fall enrollment crunch time.
Newkirk began offering its plan to its non-union employees in 2012 and is one of a growing number of companies that is adopting vision coverage during mid-cycle enrollments. The move has not only helped retain good workers, but it has also contributed to more efficiency in benefits administration, Lundholm explains. “Offering one new product at a time is so much easier,” she says. “When employees are confronted with multiple products all at once, it’s hard for them to keep the details separate. You can only take in so much.”
In Newkirk’s case, mid-cycle enrollment has also made employees more aware of the low cost of vision benefits—which at Newkirk is just $2 per week per employee, says Lundholm. Moreover, premiums are taken out of their salary pre-tax, a savings that employees appreciate. “Their reaction is usually, ‘Wow, I can afford that plan,’” Lundholm says.
The ultimate test of the plan’s strength lies in employee enrollment numbers. So far, the results are encouraging. When Newkirk began offering its vision care plan two years ago, 40 percent of the workforce enrolled. Today, the number is closer to 60 percent—and still climbing. Most importantly, Lundholm points out that having a quality vision plan as part of the company’s benefits package has made a difference in attracting top talent. The result: easier plan administration, higher enrollment, and a more attractive benefits package that helps Newkirk gain and retain quality employees.
Dr. Denis Humphreys, an optometrist in Sparks, Nevada, remembers the day four years ago when his sister Barbara dropped by his office after returning from a trip to Disneyland. She had just left the theme park, she said, when a frightening thing happened; her vision began to get blurry. By the time she reached the airport, she was unable to read street signs. The next day in her brother’s office, her vision still had not returned to normal.
The abrupt worsening of his sister’s nearsightedness set off warning bells in Dr. Humphreys’ mind. Vision changes are sometimes linked to systemic illness, which he feared might be the case with Barbara. When he used an optometric microscope to look into her eyes, his fears were confirmed. Two tiny hemorrhages, the kind often present in people with diabetes, were visible in the blood vessels of Barbara’s retina. A subsequent finger-prick test that Dr. Humphreys administered himself indicated that her glucose levels were about five times higher than normal.
He phoned Barbara’s primary care provider, who immediately scheduled her for an appointment and diagnosed her with diabetes. Diet and medication have since helped her to control her blood glucose levels, and her vision has returned to normal. Also, thanks to her VSP vision plan, she receives annual exam reminders so she and Dr. Humphries can monitor her condition. “If she hadn’t come in for an eye test when she did, her diabetes might have gone undetected for quite some time,” said Dr. Humphreys. “The good news is, we caught it early.”
For patients like Barbara, the eyes can be the windows to wellness; recent research shows that routine eye exams offer a telling glimpse into a number of underlying health conditions—and often, do so early enough for the conditions to be successfully treated before they become serious health issues.
A 2013 study 1 found that during routine eye exams, VSP doctors regularly detected chronic diseases before other health care providers.
The study evaluated VSP WellVision Exams of 120,000 VSP patients. It compared patients whose conditions were first identified as the result of an eye exam to patients who did not receive an eye exam before their diagnosis. It then compared productivity and medical cost information provided by the employer and medical plan.
The study determined that 62% of the time, VSP doctors detected signs of high cholesterol before any other health care provider recorded the condition. Additionally, first detection rates were 34% for diabetes and 39% for hypertension. The study also showed that the patients identified through an eye exam entered the health care system with fewer complications and co-occurring illnesses, and experienced lower rates of inpatient admissions and emergency room visits.
Moreover, the patients diagnosed as a result of their VSP WellVision Exam incurred, on average, fewer health plan costs, fewer lost-time costs (short/long term disability, workers’ compensation indemnity costs), had a lower job turnover rate, and lower rates of emergency room visits and hospital admissions.
For every initial $1 spent on exam services, the six large commercial companies in the study saved $1.45 over a four-year span. Together they saved a total of $13.1 million over the four year course of the study.
1Human Capital Management Services, 2013 Study of VSP Eye Health Management Program
With baby boomers retiring in droves, the millennial generation, also known as Generation Y, will comprise 75% of the workforce by the year 2025. Savvy benefits departments are preparing for the shift.
“We’re in the midst of a benefits revolution,” says Lauri Tenney, director of benefits and programs, United States and Canada, for EMC Corp., a leading provider of IT storage hardware solutions and cloud computing. “A new generation of employees will look at their benefits in a different way, and companies want to make sure they’re able to attract and retain those employees,” she says.
To appeal to all generations of workers, employers must make sure that they are both “flexible and robust” in their approach to corporate benefits, Tenney says. Listening to employee priorities will be key. One increasingly popular component of the benefits mix at EMC is vision care.
“The majority of our workforce needs some kind of vision correction,” says Tenney, “and we know that vision plans assist in the overall health and productivity of our workforce.”
EMC selected VSP Vision Care, the largest not for profit vision benefits company in the country, to administer its vision plan. VSP aligned with many of EMC’s values, Tenney notes. For example, automated appointment reminders for patients with certain chronic conditions help increase the likelihood that employees will schedule regular eye exams. “The more informed the consumer, the better off everyone is,” says Tenney.
For employers on the front lines of the benefits revolution, professionals like Tenney recommend the following battle plan:
1. Choose a benefits partner known for exceptional customer service. Stay focused on members, because tomorrow’s consumers will increasingly seek out benefits that are individually tailored.
2. Offer more refined and automated electronic tools to help employees manage their health. For example, EMC partners with VSP to leverage eye exams as a preventive mechanism for identifying chronic health conditions in employees earlier so employees can take action as soon as possible. VSP then works with EMC’s health plans on the back end to make sure those employees are getting the follow-up care they need.
3. Help employees determine their individual risk tolerance. One-size-fits-all health plans are a thing of the past. Employees appreciate having a voice in tailoring benefits to their particular needs.
4. Keep costs down. Reducing costs, rather than requiring high-deductible plans for all employees, has allowed EMC to avoid raising the amount employees pay for health care coverage this year – a feat nearly unheard of today in Corporate America. Another example of why EMC chose VSP was that the vision benefits provider offered the lowest out-of-pocket costs to EMC’s employees, increasing the likelihood they will go in for their preventive eye exams. Tenney notes that cost avoidance, a natural consequence of robust preventive care and helping employees make wise health care choices to avoid high out-of-pocket expenses, will be the secret weapon in the benefits revolution for years to come.
When companies consider their benefits mix, coverage for medical care is often top-of-mind. Yet there may be another, even more powerful concern driving employee coverage preferences: vision care. Roughly 75% of adults in the United States require some type of vision correction, and 84 percent of adults believe that vision benefits are somewhat or very important to them.1 As a result, vision assistance is moving higher and higher on the list of sought-after employee benefits.
What’s driving the trend? One factor is the increasing power of eye examinations to detect systemic illness. In addition to identifying nearsightedness, farsightedness and astigmatism, routine eye exams now play a role in diagnosing conditions such as diabetes, brain aneurysms, liver disease and stroke risk.
Early identification, in turn, translates into markedly lower expenditures for employers. In 2014, eye problems will cost companies an estimated $8 billion in reduced productivity. Making sure employees get the right eye care helps employers reduce these losses. At the same time, it boosts their ability to retain loyal workers.
So what’s the best way to get patients into the exam chair? One way is to provide a vision plan that lowers out-of-pocket expenses. Indeed, research shows that out-of-pocket expense—not premiums—is the number-one factor employees consider when choosing a vision plan. And that’s just smart, says independent insurance broker Shannon Enders. “Premiums make up only about 30 percent of total out-of-pocket expenses. So it pays to look beyond the premium and see the real cost of a plan.”
A study conducted by Service Excellence Group Inc., a leading market research company, shows how the right vision insurance plan can result in across-the-board savings for employees. The study compared the prices customers with insurance plans paid for the same popular pair of eyeglasses at independent doctors and retail chains. It found that customers with insurance plans that were most successful at keeping out-of-pocket expenses low saved hundreds of dollars.
For example, customers with VSP insurance who bought a pair of Vogue Comfort Progressive eyeglasses at a national retail chain spent as much as $594 less on the frames than did members of other vision plans for the exact same glasses. The customers with VSP insurance also had the lowest out-of-pocket expenses industry-wide, even after insurance premiums were factored in.
With eyeglasses becoming as much of a fashion accessory as a vision aid, forward-thinking companies are beginning to take note. Enders says more of his clients are saying yes to vision care plans. “Employees care about their eyes,” he says. “And offering benefits packages with the features employees care most about will become an even more important corporate strategy going forward.”
Your browser, Internet Explorer 8 or below, is out of date. It has known security flaws and may not display all features of this and other websites.
Learn how to update your browser