| Dan Eisner, Advisor, ZLC Employee Benefits Solutions |
Vision care benefits, which includes coverage for things like prescription frames and lenses, and contact lenses, continue to be an important part of any employee benefits program. Based on a past Sanofi Canada Healthcare Survey (renamed Benefits Canada Healthcare Survey), 91% of employees surveyed indicated that the vision care benefit was “Somewhat or Very Important” to them. This places it amongst the highest rated benefits in a traditional group benefits program.
While being very important to employees, the value of the reimbursement level provided has not changed much over time. If we go back approximately 20 years, employees would have received a reimbursement level of, on average, $150 every 2 years. In today’s market, the average benefit level provided to employees has increased to only $250, on average, based on market data.
While that increase in the reimbursement level works out to about 2.5% annual inflation over the past 20 years, anecdotally the price paid by employees for glasses and contact lenses has gone up much more. Part of the actual increase can be attributed to the cost of the materials used to make these products and technological advances to address more complex vision care needs. However, a big part is likely due to the expectations of employees as glasses have a fashion component and many employees are looking for more, including things like designer frames, tinted lenses, etc.
This ultimately begs the question of whether employers should be meeting these higher expectations of employees for their vision care needs. There is definitely a moral argument here, but most employee benefits plan sponsors simply look to what their competitors are doing rather than what their employees want. They look to benchmarking data to ensure their benefit level is keeping pace with market practices. Subsequently, we continually hear comments from employees that their vision care benefit levels are insufficient.
Perhaps there are other ways for employees to get more value from their existing vision care benefits without their employers having to increase the benefit level and thus increase the cost of the plan. Like any other consumer market, we should have seen more intense competition over the years from vendors in the vision care market. Looking south of the border to the more robust U.S. market, we certainly saw this many years ago. The Canadian market has lagged, which is not unusual, but there are now options and features out there that employees might want to know about, which provide the following benefits:
- Lower cost options – many vendors offer access to both luxury designer frames in addition to more affordable in-house brands and leverage a “bulk buying” model with volume discounts
- On-line vendors – these vendors often offer the convenience of purchasing from the comfort of your home with free home delivery and returns – note that some online vendors also have physical stores and some with eye exam services at those locations
- Direct billing – vision care vendors can bill directly to insurers on behalf of employees
- Promotional offers – vendors regularly provide periodic sales, “2 for 1” promotions, initial purchase discounts, refer a friend promotions, etc.
- Social enterprise – many new vendors are also supporting local and/or global philanthropic initiatives, often related to vision care and broader eye health
While the intent of this article is to not promote any particular vendor, it is worth mentioning a couple of options, but note that this is not an exhaustive list:
- Clearly (www.clearly.ca) launched its first website over 20 years ago, offering a selection of contact lenses and designer glasses and sun glasses, and now they are part of an international group of companies
- Kits (www.kits.ca) is a relative newcomer in the market but its founder has experience going back to the beginning of the online vision care market
- Specsavers (www.specsavers.ca) is a global family-run business with over 30 years of experience that has recently expanded into Canada
- Costco (www.costco.ca) not surprisingly leverages its massive purchasing power into vision care
- Insurer discount programs where the insurer for the employee benefits program offers discounts through preferred provider agreements
Most employee benefits plan sponsors struggle to sustain their current benefits plans with projected annual inflation to continue in the 6% to 8% range for the foreseeable future. As a result, increasing the vision care benefit level might not be realistic given the financial impact to the employee benefits program. Perhaps instead there is an opportunity for employers to communicate to their employees about how they can get more value from the vision care benefit currently provided. Given that employees are struggling with broader inflationary pressures in their lives, they might also just appreciate knowing that there are options out there to consider.
We would be pleased to discuss your specific situation with you to identify the best strategy for your employee benefits plans. Should you have any questions on the above, please do not hesitate to contact any member of our team.
ZLC Employee Benefits Solutions is one of the fastest growing advisors for employee benefits and group retirement programs in Vancouver and we are fortunate to have the best people, resources, and clients. We provide value by leveraging one of the most skilled benefits teams – collectively over 400 years of experience within our team of 20 employee benefits specialists. We have been working with businesses ranging from 3 to over 75,000 plan members for over 35 years.
