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Competing for the Dental Benefits Consumer

Author

Yuliya Esipov
Associate Research Director, Workplace Benefits Research
LIMRA and LOMA
yesipov@limra.com

February 2024

I recently moved to a new town — not to mention a new state — and had to go through a painstaking exercise of finding a new dentist. I had been loyal to my local dentists for 15 years. I would go quite a distance — if it were feasible — to continue with that dental practice.

According to LIMRA’s 2022 Workforce Benefits Employer Benchmarking Study, 67 percent of employers (with 100 and more employees) currently offer dental insurance to their full-time employees. I am one of the fortunate individuals who have access to dental benefits at work. In addition, I consider myself part of the large group of U.S. employees (64 percent) who, according to LIMRA’s May 2022 BEAT Study, believe they understand dental insurance very well or extremely well. Armed with that presumed knowledge, I focused on finding an in-network dental office. In the absence of any friends in the area who could provide recommendations, I logged into my phone’s dental portal app to check if there were any reviews available to help me fine-tune my search.

Just five years ago, this process was hard to imagine, yet here I was, utilizing one of the many recent technological innovations aimed at elevating my consumer experience. Finding an in-network dental provider for cost-saving purposes only partially met my needs. The checklist included the ease of scheduling and modifying appointments, simplicity of submitting an insurance claim and, most importantly, finding peace of mind in quality care, not to mention the transparency of procedural costs.     

While many dental insurance carriers are launching mobile apps that target these concerns, dental offices also actively engage in customer-centric practices that are marketed to nurture the clients’ loyalty and often directly compete with traditional dental insurance plans.

Dental In-Office Memberships

In the past few years, the industry witnessed the growing popularity of dental in-office memberships and savings plans. Like membership plans in other industries, individuals (i.e., patients) pay their dental offices fixed monthly sums in return for preventive services at no charge and discounted fees for other procedures. At their disposal, dental practices have a variety of technology and digital tools/platforms to establish, manage and market membership plans. Ultimately, individuals are wooed with less complexity, less paperwork, and greater simplicity and transparency than traditional insurance options.

It takes a savvy consumer to discern the pros and cons of a membership plan versus a true insurance option. LIMRA’s 2021-2022 Employer Benchmarking Study shows that the average eligible nonunion employee takeup rate for dental benefits ranges between 45 percent and 92 percent, depending on the percent of premium paid by the employer. What prompts an individual to opt out of the employer-offered dental benefit plan? If we put aside such options as having coverage through a spouse/partner plan, the motives cited are quite straightforward: Individuals question whether the benefit is worth the cost and the benefit’s overall affordability. And yet, there is something in that reasoning that raises a few red flags.

How does the decision-making process correlate with the individual’s understanding of dental plans? Employees who stated that they understood dental benefits just a little are more likely to believe that they do not need dental insurance and would rather spend money on other benefits than those who think that they understand dental insurance extremely or very well (Figure 1). It seems many employees come to open enrollment with their minds made up. Whether an individual spends more or less than an hour reviewing benefits information, it does not affect an individual’s perception of their dental benefits knowledge, according to the 2022 Beat Study. Almost 50 percent of employees, agree that their employer communicates benefits information very well or extremely well, and the amount of benefits information and education provided during the open enrollment period is “about right.”

Figure 1. Percent of Employees Who Stated the Following Reasons for Not Enrolling in Dental Benefits

(Based on understanding of dental benefits)


Filter the data in this chart by clicking on a color bar in the chart legend.
Source: 2022 BEAT Study: Benefits and Employee Attitude Tracker, LIMRA, May 2022. Unpublished data.

Now, let’s look closer at the “cost-benefit” reasoning that a presumably knowledgeable consumer applies. Increasingly, the balancing act of a “shared wallet” becomes an intricate task. If you receive an extra $50 to spend on benefits, which benefit (life, disability, dental, etc.) would top your list? Only a quarter of employees opted for dental insurance, according to the 2022 BEAT Study. Yet this is still the second highest ranking, shared with life and wellness (physical, mental or financial).

So, what is the actual driver in the decision not to enroll in dental benefits? Allow me to disagree that the cost of the benefit is the true reason employees opt out. As I walked into my new dental office, I glanced at an engaging poster promoting a mobile-friendly platform that clearly outlined the benefits of their membership plan. I spent a few minutes in the waiting room before walking to the receptionist’s window with the insurance card in hand. It occurred to me that most people would likely spend a similar amount of time choosing to enroll in dental benefits as I spent in the waiting room at the dentist’s office, and I wondered how many employees will opt out of dental benefit plans and instead switch to the membership discount plans in the near future.

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