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Key Takeaways
ARTICLE | The Boring Yet Obligatory Guide to Dental & Vision Insurance For Employers
Dental and vision insurance have often been looked at as more of an afterthought than a necessity, but those views are quickly becoming outdated.
Not only are an increasing number of organizations offering supplemental dental and/or vision insurance options, but more and more organizations are choosing to contribute to the coverage costs, as well, which further encourages participation.
In addition to that organic growth, a slew of recent changes in vision and dental insurance-related law both at the state and federal level indicates that this space currently has the attention of policymakers, as well, with one new federal rule poised to expand demand levels for dental and vision services in the coming years, potentially leading to some upward pressure on the costs associated with these services in the future.
Let’s take a look at dental and vision coverage in terms of where we’ve been, where we are, and where we’re going.
According to the most recent Mployer Insights data for 2024, the vast majority of employers offer dental insurance (93%) with a slightly smaller proportion offering vision insurance (82%) as well, but smaller organizations are less likely to offer these supplemental forms of health insurance than larger organizations.
In fact, only about 40% of employers with between 2 and 24 employees offer dental insurance, but that number climbs significantly to about 90% and up for employers with 100 or more employees. About 60% of employers with between 25 and 49 employees offer dental insurance, while about 75% of employers with between 50 and 99 employees offer dental insurance, so the employee count and dental insurance trend are pretty closely correlated, although there is some additional variance depending on industry and geographical region, as well.
Interestingly, the percentage of employees who choose to enroll in dental insurance plans if offered by their employer is much less correlated with employee count and more consistent across variously sized companies. The enrollment rate for companies with between 3 and 24 employees is about 71% and about 75% for companies with 500 or more employees.
Employer contributions toward employee dental coverage aren’t strongly correlated with employee count, either, with about 16% of employers covering 100% of the premium, about 16% of employers making no contributions toward employee dental plan costs, and the remainder (about 68%) making partial contributions.
As for vision insurance, about 62% of employers with between 3 and 24 employees offer it, which is significantly above the 40% of comparably-sized employers that offer dental insurance, but only about 83% of employers with 100 or more employees offer vision insurance, which is a bit under the approximate 90% of employers with 100 or more employees offering employee dental plans.
Participation rates among employees who are offered vision insurance hovers in the low 70% regardless of company size, which is comparable to dental insurance as well. Employer contributions toward employee vision plan costs are comparable - although slightly more generous - than dental plan contributions, with about 19% of employers making a 100% contribution to employee vision plans and about 64% providing a partial contribution.
It is also worth noting how these trends have evolved over time with half of the growth in small business dental insurance offering rates since the beginning of the millennium occurring in just the four years between 2019 and 2023.
The proportion of smaller organizations offering vision coverage has seen comparable growth, with the percentage of large employers who offer vision insurance doubling between 2006 and 2023, while the percentage of small employers offering vision insurance quadrupled over the same time period.
Smaller organizations clearly lagged behind larger organizations in terms of adding dental and vision benefits to their offerings, but they have nearly caught up at relatively low employee counts in terms of participation, although there is still room for differentiation on the contribution front, both with dental and vision coverage, which is especially relevant given how consistent demand seems to be for these offerings at employers of all sizes.
There are no laws that require employers to provide employees with dental or vision insurance, although doing so has certainly become the norm amongst organizations, regardless of size.
Further, the ACA does not require parents to provide children with dental insurance, but it does label dental insurance for children as an essential health benefit, thereby requiring that such coverage be either included in a plan or offered as a separate plan in order for an insurance plan to meet the minimum qualifications necessary to appear on the exchanges.
A few months ago, however, the Centers for Medicaid and Medicare Services issued a new rule that will allow states to designate non-pediatric dental care for adults as an essential health benefit as well, which will broadly expand the dental coverage options for many of the residents of states that opt-in.
As a caveat, it is important to bear in mind that this expansion will only apply to those states that take proactive steps to label adult dental care as an essential health benefit as a matter of law, which is not a cause that will be taken up by all state legislatures in the near future, so not all states will see a meaningful shift in demand as a result.
There has also been significant activity in recent years addressing issues including transparency, patient choice, downcoding, network access, and loss ratios.
While there are several different plan designs for dental benefits, by far the most common are Preferred Provider Organization (PPO) plans, accounting for more than 8 out of 10 employer-sponsored dental plans.
Typically, DPPO plans contain an annual cap on all expenses, which is the most money that an insurer will pay out for a claimant in total over a single year.It’s important to also point out that these annual caps often exclude orthodontic work, which may have a separate lifetime cap - meaning that orthodontic work doesn’t count against the annual cap but instead has its own separate maximum dollar figure that an insurer will pay out for orthodontic work over the life of the policy.
Additionally, DPPOs will typically require insurance to cover a predetermined percentage of any given service up to that annual limit after a small annual deductible is met.For example, a DPPO plan may have a $1,500 annual cap and a small annual deductible, which is often waived for class 1 preventative services. Coinsurance amounts are usually broken down by class of service, with plans typically covering preventative services like teeth cleanings at 100% (deductible waived), 80% coverage for basic restoration work (after deductible is met), 50% for major restoration work, and 50% for orthodontic work up to a lifetime max (e.g. $1,500).
Other relatively common types of dental plans include Dental Health Maintenance Organizations (DHMO), which prepay dentists for potential services and account for about 4% of dental plans; traditional indemnity plans, which are similar to DPPOs but without the same in-network emphasis and account for about 3% of dental plans; Point of Service plans, which further emphasize discounts for in-network services; and Direct Reimbursement plans, which reimburses policy holders for their expenses after the fact according to a predetermined reimbursement schedule.Some of the key elements that distinguish plans are:
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You can read more about the various types of dental plan designs and their differences in this piece from the American Dental Association.
Four of the main types of vision plans closely mirror prominent plan types for dental insurance coverage: Preferred Provider Organization plans, Health Maintenance Organization plans, Point of Service plans, and Indemnity insurance plans.
Beyond plan structure, some of the main factors to consider that distinguish one plan from another are:
While deductibles are less common with vision insurance than dental and traditional medical coverage, copays and annual coverage caps are standard.
The US dental insurance market crossed the $80 billion threshold in 2021, and is expected to grow by 6% compounded each year between 2024 and 2029, while the US vision insurance market is expected to hit about $60 billion this year.
Top market share leaders in the US dental insurance market are:
The top market share leaders in the US vision insurance market are:
On one hand, it is understandable why dental and vision care have historically been dealt with as separate offerings from traditional medical care.
For one, professionals in each field are typically trained at separate institutions on separate courses of study with little overlap, and much dental and vision related care takes place at separate sites apart from hospitals and traditional medical practices.
But these distinctions are becoming less and less relevant given a modern understanding of how closely tied dental health can be to overall bodily health, not to mention the correlation between proper progressive lens care and productivity.
As with many other aspects of life and business, regular maintenance and an ounce of prevention can be worth a pound of cure, and employers have an opportunity not only to provide employees with a valuable benefit offering, but they can also stand apart from competitors on the talent attraction and retention front by not only offering dental and vision insurance but also making contributions to that coverage to further encourage employees to opt in.
With as many as 3 in 10 US adults currently without dental insurance, and with up to 8 in 10 US adults currently without vision insurance, there is no better time than the present for employers to review their benefits offerings to determine how best to help employees meet their dental and vision insurance needs.
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