Oral Health for the Elderly: Challenges and Opportunities

1. Voluntary Dental Insurance Programs for Retirees John Brouder Boston Benefit Partners, LLC Boston, Massachusetts June 28, 2007 Oral Health for the Elderly: Challenges and Opportunities

2. 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

3. Case Study: Voluntary Retiree Dental Plan Plan Sponsor • Group Insurance Commission (GIC) Commonwealth of Massachusetts • Largest Benefit Purchaser in New England • Sophisticated Purchaser

4. 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

5. 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

6. 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

7. 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

8. Case Study: Voluntary Retiree Dental Plan 6 Year Premium Rates – 25% below the starting rates

9. 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%

10. Case Study: Voluntary Retiree Dental Plan 6 Year Plan Enrollment – Up 220%

11. Case Study: Voluntary Retiree Dental Plan Annual Claims Paid Per Subscriber

12. 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

13. 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

14. 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

15. 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.

16. 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.

17. 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.

18. 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.

19. 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

20. 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

21. 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

22. 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?

23. 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?