In general, innovation in dental benefits has lagged behind medical, industry experts say, but employers increasingly are looking for ways to offer more comprehensive and customized benefit packages to attract and retain talent. Recognizing this trend, Rose & Kiernan developed a unique private benefit exchange to include a comprehensive lineup of products — including a choice of customized dental plans.
The East Greenbush, N.Y.-headquartered firm, established in 1869, has always looked at change and challenges as “an opportunity,” according to its senior vice president of employee benefits management, Keith Dolan.
“There was a time when the broker would place products and then they’d be busy during the year trying to handle those communications and offering ongoing support. Now, we’ve found that in the last five to six years you have to be a strategic partner with your client,” says Robert Kuelzow, senior vice president, employee benefits management practice leader for Rose & Kiernan. “There’s an ongoing relationship that includes product and a technology platform. The clients that really get that are the ones that are seeing the benefits of what can happen when technology comes together with the products, as we’ve done with our exchange platform.”
RKXchange is the firm’s private marketplace, which launched in 2014. In a defined contribution program, employers provide employees with a specific amount of money that can be used to pay for benefits for the plan year. Depending upon the specifics of the program, employees can use their funds to purchase medical and other benefits, including dental, vision, life and disability.
“Obviously, the benefits package starts with the medical coverage, but one of the things we’ve done very purposefully is try to design all the products to be collaborative in nature,” says Dolan. “So we went to our dental carriers who we have great relationships with to design a choice strategy that is intelligent in how it is developed. We were fortunate enough because we were early in the process and they were learning with us. So we got to sit down with their actuaries and underwriters and say, ‘If you stop thinking in the old way and decide to offer choices that to a consumer are attractive, what would they be?’”
For example, he says, a single 20-something may be interested in different dental coverage than a 42 year old with a family of four and two nine-year-old daughters that need braces.
“We didn’t just put three plans out there and tweak maximums and say, ‘Here’s your offering,’” says Dolan. “We knew somebody was going to be looking for only basic preventative services and the network discount, so they will be looking for a very low price point. Somebody else will be looking for the highest max, richest ortho, best plan you can buy.”
When Pioneer Bank, a long-time client with Rose & Kiernan moved their 235 employees onto the RKXchange, they chose to offer three tiers of dental plans offered through one carrier.
Matt Harrington, senior HR generalist with the bank says they chose to use the exchange for its simplicity and ease of use, including the collection of all plan documents in one portal and automated e-mails for enrollment and changes.
“When we rolled it out it was obviously a totally different concept,” he says. “We mandated that people sit down with the enroller and it made it easier and more complete for employees. It was a pretty smooth transition,” he says.
Ninety-eight percent of large employers (500+) offer dental, with 55% offering an active PPO, 41% offering a passive PPO and 12% offering a dental HMO, according to the 2015 Mercer National Survey of Employer-Sponsored Health Plans.
Quote"Obviously, the benefits package starts with the medical coverage, but one of the things we’ve done very purposefully is try to design all the products to be collaborative in nature."
Ninety-five percent of employer plans have an annual maximum benefit, with the average being $1,500. Ninety-six percent of employers offering orthodontic coverage have a lifetime orthodontic maximum benefit, also with an average benefit of $1,500.
New way to look at selling dental
Rose & Kiernan had to help educate the carriers “that you can’t look at it in isolation of adverse selection of one plan to another. You have to look at it for what is: The buying habit for the plan being picked,” Dolan says.
Employees are not necessarily just picking a plan based on price, then, he says, but based on what that plan’s characteristics are that are desirable to that person.
“What we thought and were able to demonstrate was that if we built those plans and built the family [of coverages] you might see in one individual case some skewed enrollment, but on a bigger number you’re going to start seeing some consistency,” says Dolan. “To our surprise, it flowed down a lot more granular than we thought. We saw a very uniform split of enrollment, case after case after case. “
Relative to medical benefits, industry experts say, innovation with dental benefits has lagged.
“There are a few reasons for that,” according to Rich Fuerstenberg, a senior partner at Mercer. “On the employer side, dental is kind of a quiet benefit. It’s not expensive and the network is usually satisfied. So for an employer to come in and say they are going to blow up their dental benefits is risky.”
Where and how dental sits on an exchange is going to bear out over time, he says, but for those exchanges that do have dental, the choice is typically limited to one or two carriers with little differentiation between plans.
“The concept of a choice of dental plans is a game changer,” Fuerstenberg says. “As more employers are going down the exchange path, it might be disruptive to the dental space.”
“We were as guilty of this as anyone,” says Rose & Kiernan’s Dolan. “We, as advisers, don’t force the clients to spend the necessary amount of time on it. We’re so concerned that our clients are busy that we minimize the importance and don’t spend the time in the design phase and really lay out the goals and objectives of what they really want to accomplish.”
With the changes that were spawned by the Affordable Care Act, Kuelzow says, employers really started to revisit why they provide benefit packages and what was their primary purpose. He says, for most that is to attract and retain talent.
“For the most part, employers believe in trying to provide the highest level benefit package they can, given the circumstances either financial or as dictated to them by size and the market,” he says.
“Rose & Kiernan built themes around its exchange that fit with achieving those objectives. Obviously, the first question every broker gets asked is, ‘How are you going to help me manage the cost of my benefit package,’” Dolan says. “What the ACA did was sort of mold the second question, which now is, ‘How are you going to help me manage my compliance needs?’”
He continues, “Those are the two primary themes of our exchange. The last two deal with choice and communication. What we found is that with the change in society and the development of individual demand in the marketplace, whether it be home buying, retail, or cars, they want a customized experience made for them.”
Rose & Kiernan, through its exchange, set out to “squeeze as much waste out of the system for the employer and at the same time provide as much choice for the employees.”
That, Dolan says, includes product choice and how to experience and learn about that product.
The experience, he adds, has been developed so that each employee can walk away feeling that they designed a customized benefit package to meet their and their family’s needs.
“That has increased the satisfaction level tremendously for the 71 groups that have gone on the platform since 2014.”
Of those clients, 52 of them were existing RK clients, Dolan and Kuelzow say. Prior to going on the exchange, they had, on average, 4.5 lines of coverage. After going on the platform, the average number of coverage lines is 14.5.
“The reason we’re able to accomplish that is that, previously, when I would sit in front of a client prior to having this solution and say, ‘We have this great new benefit we think some of your employees would benefit from,’ you would get this glazed over look from the decision makers. They would say, ‘I can’t handle one more carrier, one more bill, one more website, one more thing to communicate to my employees. I don’t care how wonderful it is.’”
The RKXchange allows Rose & Kiernan to consolidate all the lines of coverage into one bill.
“We’re bringing efficiencies not only to the client and to us as to how to serve that client, but also to the carriers. We’ve reduced receivables to the carrier. We’ve reduced administrative charges to the carriers. So the carriers on our platform have been excited not only by the results from a volume standpoint, but also because of the profitability for the individual cases as the administrative fees and margins continue to shrink.”
“Private exchanges have to drive enough business through the carriers to get them excited to give your clients the guaranteed issues and discounts and make this viable beyond just the actual platform,” Kuelzow adds.
“When we decided to create our own proprietary system it took a lot of time, money and effort to do that — and human capital — but it’s really paying us dividends on the backside with the partnerships we’ve built and engaged with. It makes us a little unique, because every broker out there looks so much the same right now in so many ways and everybody says they can do the same thing. So to truly have a value for your clients that is different and clients understand they can embrace this technology, it has been tremendous for our agency,” Kuelzow says.
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