Oral Health for the Elderly: Challenges and Opportunities
Voluntary Dental Insurance Programs
for Retirees
John BrouderBoston Benefit Partners, LLC
Boston, MassachusettsJune 28, 2007
Voluntary Retiree Dental Plans
The future of retiree medical insurance?– In the private sector (FAS 106, early 1990’s)– In the public sector (GASB, 2005)
The future of retiree dental insurance?– In the private sector – In the public sector
Case Study: Voluntary Retiree Dental Plan
Plan Sponsor
– Group Insurance Commission (GIC) Commonwealth of Massachusetts
– Largest Benefit Purchaser in New England– Sophisticated Purchaser
Case Study: Voluntary Retiree Dental Plan
Significant potential covered population
– Retired state employees, dependents & spouses– Retired teachers, dependents & spouses from 70
Massachusetts cities and towns– 55,000 “certificate-holders” and their dependents
Case Study: Voluntary Retiree Dental Plan
Feasibility study – Legislature set parameters - voluntary plan– Potential demand for dental and vision plans
reviewed– “Informal” request for proposal (RFP) issued to
select dental and vision carriers– Retiree Survey
Case Study: Voluntary Retiree Dental Plan
Feasibility Study “Boston Benefit Partners believes that the ‘ideal’ plan sought
by retirees does not currently exist in the voluntary insurance marketplace. Participation in voluntary programs in neighboring states is low. Survey data suggest that the overwhelming majority of eligible retirees could not afford to pay for a dental plan that offered wide freedom of choice to see providers, comprehensive coverage, low premiums and low co-payments.”
April 21, 2001
Case Study: Voluntary Retiree Dental Plan
“Very Cautious” Plan Design:– $750 annual maximum– Table of Allowance approach– 6 month waiting period for Type III services– Lifetime lockout for anyone leaving plan
Case Study: Voluntary Retiree Dental Plan
6 Year Premium Rates –
25% below the starting rates
Fiscal Year
Single Family
2002 $32.36 $77.16
2003 $34.63 $82.56
2004 $29.99 $71.51
2005 $27.13 $64.69
2006 $27.13 $64.69
2007 $23.93 $57.64
Change -26% -25.2%
Case Study: Voluntary Retiree Dental Plan
‒ FY 2003 rate increase was based on a contractual 2-year proposal
‒ FY 2004 renewal lowered premium by 13% and increased annual maximum form $750 to $850 and increased Table of Allowance
‒ FY 2005 renewal lowered premium by 9.5% and increased Table of Allowance by 8%
‒ FY 2006 rates remained at FY 2005 level‒ FY 2007 rates declined by ~ 11%
Case Study: Voluntary Retiree Dental Plan
6 Year Plan Enrollment –
Up 220%
FY Single Family Total
2002 2,841 759 3,600
2003 3,553 1,016 4,569
2004 4,721 1,453 6,174
2005 6,088 2,172 8,260
2006 6,953 2,644 9,597
2007 8,114 3,428 11,542
Increase 5,273 2,669 7,942
Case Study: Voluntary Retiree Dental Plan
Annual Claims Paid
Per Subscriber
Fiscal Year Claims Paid
2002 $257.35
2003 $285.91
2004 $323.52
2005 $352.68
2006 $367.44
Change + 42.7%
Case Study: Voluntary Retiree Dental Plan
Sample Table of Allowance reimbursements (July 1, 2002 & July 1, 2007)
Metro Boston is a high cost region, but parts of Massachusetts are (relatively) low cost
Code Proc Amount (July 1,
2002)
Amount (July 1, 2007)
150 Oral Evaluation
$32 $50
1110 Prophy $54 $75
2160 3 Surface Amalgam
$71 $78
2790 Crown $340 $385
4341 Scaling/ Quad
$59 $63
5213 Partial Upper
$360 $425
Case Study: Voluntary Retiree Dental Plan
Increase in patients seeking care from passive PPO providers
Altus network includes ~ 50% of region’s providers
Retirees are attuned to financial realities
Fiscal Year % Using Par DDS
2002 35.9%
2003 43.6%
2004 46.4%
2005 52.8%
2006 56%
Change + 55.9%
Case Study: Voluntary Retiree Dental Plan
Educational & Communication Efforts– Older people have unique communication needs– Older people want information in a variety of ways:
traditional print, phone, internet– Older people will ask questions
Case Study: Voluntary Retiree Dental Plan
Member Satisfaction Survey: Savvy Consumers
I would like to cancel this insurance as I don’t use it enough. I am 80 years old. I have all my own teeth and go to the dentist once a year for cleaning and checking.
I’m, not sure the plan is worthwhile with the high premiums and the low maximum
The $750 maximum is really not in balance with the almost $400 I pay in annual premiums. I am debating dropping my dental coverage.
Case Study: Voluntary Retiree Dental Plan
Member Satisfaction Survey: Wishful Consumers
I wish the coverage was more inclusive and less expensive Altus is a start but premiums are too high. Can you devise a plan with
more services and less expensive premiums? We would like better coverage and less expensive premiums.
Case Study: Voluntary Retiree Dental Plan
Member Satisfaction Survey: Consumers Want Different Things
I would not mind paying a little more in order to have more coverage.
I wish the premiums were lower, even if there was less things covered.
Case Study: Voluntary Retiree Dental Plan
Member Satisfaction Survey: Plan Design Increase the $750 maximum to $1000 immediately. Raise the annual maximum to at least $5000. How come if you leave the plan you can never rejoin? I only want the
plan during the years when I need services! We are in hopes of getting credit for unused portion of our annual
allowance of $750…even a small percentage. Contemplating implants – wish insurance companies would recognize
they are not merely cosmetic but essential for survival.
Case Study: Voluntary Retiree Dental Plan
Advantages – Plan is growing & popular among participants– Plan is solvent--has not experienced the much
feared “premium death spiral”– Participants are increasingly using “passive” PPO
providers to stretch their dollars
Case Study: Voluntary Retiree Dental Plan
Disadvantages– Plan remains too expensive for most retirees and
utilization is still low– Plan generates healthy skepticism among
retirees--”should I really be self-financing these expenses”?
– Carrier’s 5-Year “retention” much higher than expected or desired by plan sponsor
Case Study: Voluntary Retiree Dental Plan
What we’ve learned – Many retirees are interested in participating in a
dental insurance plan– Without employer contributions, most retirees
cannot afford even modest premiums– Some retirees were able understand a tricky plan
design and effectively utilize benefits
Case Study: Voluntary Retiree Dental Plan
Should a carrier invest scarce resources in this product?
– Are you already active (and profitable) in the group voluntary dental market?
– Are you participating in the Federal Employees Dental Program?– Do you regularly sell to local or state governments? – Significant issues/considerations for carriers
Retirees present interesting (and time-consuming) communication issues
(Traditional) minimum participation guidelines may not work Will this type of plan appeal to your existing PPO providers?
Case Study: Voluntary Retiree Dental Plan
Should an employer invest scarce resources in this benefit?
‒ Do you plan to offer employer-paid medical insurance to retirees in 5 years? In ten years?
‒ Do you plan to offer employer-paid dental insurance to retirees in 5 years? In ten years?
‒ Do you want to be offering any benefit programs to retirees in the future?