A Vision Benefits Primer

Human Resource Managers are faced today with demand for better benefit packages despite shrinking budgets. With low unemployment and eroding employee loyalty, the challenge is how to attract and retain the best workforce while keeping costs, especially benefit costs, low. Couple this with the double digit inflation that the health insurance market has been experiencing and it may sound like an impossible task. Not if you have vision.

Vision Benefits are rapidly becoming a standard part of a complete benefits package. By the end of 1997, 35% of Indiana employers offered some form of Vision coverage. That number has continued to grow, and we project that 70% will include Vision coverage by the new millennium. Why are so many companies moving in this direction? Because it makes such good sense. Not only are Vision Benefits one of the most highly desired and frequently requested employee benefits, but they also benefit the employer. It doesnít take a federally funded study to teach us that employees with better visual acuity will perform more efficiently.

Since Vision Care Benefits, when structured properly, are very inexpensive, the improvement in productivity alone may even pay for the entire program. In addition, an annual eye examination is an essential part of any preventative health care program. Through an eye examination, an Optometrist may uncover such nascent systemic disorders as diabetes, hypertension, and certain tumors oftentimes before symptoms are present. Thus a vision plan can actually save lives. But your insurance agent may not know much about Vision Benefits. Vision Plans are so inexpensive (thus generating very little commission), and such a small portion of the total healthcare benefit budget, many agents donít spend much time on it. So, here is a brief primer on Vision Care Benefits to help you see the total picture.

Vision Plans, like Health Plans, offer greater value to both employer and employee when using a network of preferred providers. This allows the employer to truly take advantage of their buying power. There are some groups that offer a large network, but typically, they do not include the doctors who offer one hour service on glasses. That may not seem important at first glance, but consumers prefer the convenience of fast service, and employers like the fact that employees need little if any time away from work to take care of their eye care needs since they can be examined, select their glasses and pick them up in the same visit. In addition, the doctors that offer one hour service also maintain evening and weekend hours adding to the convenience.

Preferred Provider Vision Plans are available in a variety of guises and from a variety of sources. Vision Only HMOs, traditional indemnity carriers and self-funded plans are the most common. Upon careful analysis, it becomes obvious that self-funding vision benefits are the only way to go. Vision is a defined benefit. The patient is typically limited to one eye examination and one pair of glasses (frame and lenses) or one pair of contact lenses per year. The benefit is further controlled by limiting the value of the frame and style of lenses that are fully covered. There are no catastrophic claims! Therefore, there is no reason to pay the premium for protection against catastrophic claims and no reason to give the extra profits to the insurance companies.

The administrative side of vision benefits is also fairly simple. Since claims are limited to once per year, most Third Party Administrators have very modest charges for administering vision claims, and some even handle vision care at no additional cost. Beware of companies that have high administrative charges. Iíve seen some charges that range as high as $0.35 to $1.40 per employee per month for individual coverage. The administrative costs associated with a Vision Care Plan should be much lower, perhaps even non-existent.

With the typical self funded health care program, in general, Human Resource Managers closely monitor the administrative rather than the utilization charges since they can exert more control over administrative costs but possess very little power to control the costs assigned to medical providers. However, with Vision Care, the differences between utilization charges can be very dramatic. For example, in a survey of private practice "Mom and Pop" optometrists conducted in the Indianapolis metropolitan area in September, 1997, the usual and customary eye examination fee was $63.75. Any plan that utilizes these practitioners will have higher utilization costs than plans utilizing corporate optometrists.

You should not have to pay more than $40 for an eye examination including patient co-payments. The magnitude of the savings on materials (glasses and contact lenses) is very similar. There is no difference between private practitioners and corporate optometrists in the training, or quality of care. They are all state licensed and receive the same education. The only difference is the cost. Also, only do business with a company that will tell you up front exactly what you will be charged for each service. That way you will avoid the unpleasant surprise of exorbitant or unreasonable utilization charges.

Now that we have determined that a Vision Plan should 1). utilize a Preferred Provider Network (preferably one that includes One Hour Service), 2). should be self-funded, and 3). should utilize corporate optometry, we have to design the plan itself. First, chose a company that will allow you the flexibility to design a program that meets your specific needs. Many large vision benefits companies have a limited range of plan designs. Smaller companies will be able to customize a plan to your specifications.

Typically, a vision benefits program will provide an annual eye examination with either no copayment or a very small one. The typical exam copayment is $5.00 to $10.00. The benefits on materials are more varied. Most plans offer glasses (frames and lenses) or contact lenses every year. Some offer glasses and contact lenses every year. A few limit the frame benefit to once every 24 months. There is usually a small co-payment required for the materials (typically about $20).

The differences in the materials benefit are what separate a first class program from a basic program. The basic program will provide standard lenses (either bifocal or single vision) and a basic frame. If employees desire a designer frame or a progressive bifocal, they will have to pay the difference out of pocket. A first class plan will allow for better frames and specialty lenses. You should be able to work backwards in designing a program. If you determine your total budget for vision care, a benefit design can be formulated to come in under that budget.

Vision care benefits are rapidly becoming a standard and expected part of a complete employee benefits package. With careful planning and utilizing a PPN that offers one hour service, you will be able to provide your employees with a vision plan that includes annual examinations and materials with a nominal copayment at a cost of only pennies per man hour. In today's difficult job market, Vision Benefits may be just what the doctor ordered. Contact Dr. Tavel for more information.