Making The Case For Dental Benefits In The Small Group Market
Roger W. Skinner
April 2017

We all know that small business is the lifeblood of the economic growth in our nation.  No matter how you count the numbers, small business continues to add jobs year after year.  Sure it can be difficult for a small business to compete with large employers, but I think you will agree that small employers have all of the same reasons for offering employee benefits as do large employers.  Any business that wants to compete for the best employees is going to be required to provide a benefit package at least somewhat resembling those large employers offer.

The question of why employers offer employee benefits is not a trick question.  It has been, and will continue to be, to attract and retain quality employees.  Benefit plans are also a good way to get as much mileage out of a dollar as possible as the employer deducts premiums paid as a business expense and the exclusion of the benefits as taxable income to the employee.  These basic tenants of employee benefits will continue to apply as long as we have an income tax.  Unless Congress discontinues this (which has been considered with ACA repeal and replace) these tax savings stretch the dollar tremendously.  In addition, employee contributions (and health savings accounts and flexible spending accounts) also receive similar tax treatment.  

Where do these opportunities exist?  Contrary to popular opinion, I believe the better opportunities are with employers without current plans.  Why?  Because you don’t have to compete against something already in place (not that there is anything wrong with competition).  Sticking with the basic reasons of attracting and retaining quality employees should net plenty of interest while prospecting.   According to the National Association of Dental Plans (NADP), 92 percent of employers with 100 or more employees offer dental benefits yet only 59 percent of employers with 50 or fewer employees offer any type of dental benefits to employees.  Seems to me there is plenty of opportunity to prospect by offering dental benefits if eight percent of large employer groups and 41 percent of small employers don’t have an existing plan.  NADP research also indicates that the days of 100 percent employer funded dental benefits are coming to an end, with only 6.5 percent of group dental enrollment paid for completely by the employer in 2014, a 22 percent decline from 2009.  Finally, NADP research indicates that overall dental enrollment continues to rise, so one can logically conclude that paying for dental benefits is not a prerequisite to compete with other employers (thus eliminating the objection of cost to the employer) and that employees continue to see the value of obtaining dental benefits in the workplace.  NADP research also shows that only medical coverage and retirement options ranked higher in importance to employees than dental.  

As dental benefits shift more toward voluntary, the value of demonstrating the need for good oral health becomes more important and should be made known to employers and employees.  Some of these conditions include:  

  • Acute Myocardial Infarction (AMI)—controlling periodontal disease has a significant impact on reducing AMI.
  • Respiratory Conditions (COPD)— there is a link between gum disease and chronic respiratory conditions.
  • Dementia—those with fewer of their own teeth are at increased risk of memory loss.
  • Diabetes—Gum disease is also associated with increased risk for diabetes complications and may be associated with the development of Type 2 diabetes.
  • Breast Cancer—those missing mandible molars compared with those who were not found a higher incidence of breast cancer.

Oral health is important for various reasons from young adulthood through adulthood and our senior years.  As my good friend and dentist Dr. Nick says, “Your teeth are connected to the body, aren’t they?”  So why wouldn’t you want to take care of them just as you want to take care of your body?

Savvy employers are going to offer dental because employees want it, they understand the connections between oral and overall health, and it is affordable.  Before any considerations for tax advantages of dental benefits via employer paid and/or Section 125 pre-tax savings, the cost of dental in most parts of the United States is about the same price as a daily cup of coffee at McDonalds.  

It is important to consider offering choices in plans since employees have different needs and budgets.  In most markets it should be possible to offer at least a dual option for employees in groups of 10 or more employees and possibly even for smaller groups.  Considerations should include the following options:

Option A—Dual Option

Low cost plan

  • DHMO style plan
  • Discount plan
  • Preventive  only coverage
  • Limited benefit Maximum Allowable Charge (MAC ) plan

Traditional Plan 

  • PPO plan
  • Indemnity plan

Option B—Triple Option

Good—Better—Best approach using dual option plans with varied premiums to fit the desired price points.

If the employer will contribute to the plan you may be able to obtain a high employee participation level which could result in a lower premium rate as well.  

So far I’ve touched on the viability of the small group dental opportunity from the employer and employee perspective, but what about from the broker/consultant perspective?  Consider the following:

  • A low cost, highly popular dental benefit can be a good door opener for a broker.  Once you have a satisfied customer with dental, it can pave the path to other opportunities with the employer and/or employees.  
  • Enrolling dental does not require any underwriting; it is a simple enrollment with basic employee and dependent information.
  • Servicing a dental plan should be substantially less time consuming than other health insurance products.  Plans are easy to understand and usually offer great customer service for both insureds and providers.  
  • What is the income potential with dental?  Assumptions:  $500 average annualized premium per employee at 10 percent commission and 10 percent per year lapse rate.  Enrolling 20 lives per month for five years.  Annual commission amount:
    • Year one—$12,000
    • Year two—$22,800
    • Year three—$32,520
    • Year four—$41,268
    • Year five—$49,141

Want to increase the revenue?  Consider adding a vision plan alongside of the dental plan.  Most dental carriers today have vision options that can be sold either stand- alone or combined with the dental.  If the average vision premium is 30 percent of the dental premium, commissions increase by 30 percent or by $3600 to $15,600 in year one and by $14,742 to a total of $63,883 in year five.

Author's Bio
Roger W. Skinner
CLU, RHU, REBC, is vice president of business development for Argus Dental & Vision, Inc. Skinner has a BS from Indiana University School of Business with a major in insurance and has over 45 years of experience working with brokers in the benefits world, specializing in dental and vision for the past 25 years. Skinner can be reached by telephone at 813-922-8168. Email: rskinner@argusdentalvision.com.















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