The Impact of Inflation on Employee Benefits

In today’s rapidly shifting economic landscape, inflation is a constant presence, affecting everything from groceries to employee benefits. For employers, rising costs bring significant challenges, especially when it comes to maintaining competitive benefits packages. One area that often flies under the radar but is critically important is dental insurance. This impact of inflation on dental care amplifies the urgency for employers to find innovative solutions that balance cost management with providing meaningful benefits.

Rising oral care costs: a growing concern

Dental care costs have surged significantly over the past two decades, with inflation in the dental sector now outpacing overall inflation (NADP, 2023). This trend means employers face increasing pressure to provide benefits that remain accessible and valuable while managing rising premiums. For employees, these higher costs often result in delayed or skipped dental care, which can lead to more serious (and expensive) health issues over time (Health Policy Institute, 2023).

The link between oral and overall health

Beyond managing costs, there’s a strong body of evidence showing the connection between oral health and overall wellness. Employees who receive regular preventive dental care are not only less likely to experience costly oral health issues but also see reductions in medical expenses for chronic conditions like diabetes and heart disease (Artemis Health, 2024). This reinforces the idea that dental benefits are not just a perk, but a critical component of a healthy workforce.

Modernizing dental plans to combat inflation

To address the challenges posed by inflation, it’s time for employers to rethink traditional dental plans. Strategic updates to plan designs can create more value while controlling costs. Here are some ideas to consider:

• Tailor plans to your workforce: By analyzing your employee demographics, you can identify areas of need. For example, maternity dental benefits or age-specific coverage can provide targeted support and demonstrate your investment in employee health.
• Emphasize preventive care: Plans that prioritize cleanings, exams, and early interventions help employees stay healthier and also reduce long-term claims and costs (Healthy People 2030, AHS-02, 2024).
• Provide access to the best dental network: Ensuring members receive maximum savings starts with identifying the right network for their needs. A thorough evaluation, in partnership with your benefits consultant, helps identify optimal networks, while encouraging employees to use in-network providers lowers out-of-pocket costs.
• Set needs-based annual maximums: Balanced maximums prevent over- or under-insuring. Higher maximums may suit employees needing extensive restorative care, while younger employees might benefit from a focus on preventive services. There may be the need to offer more than one dental plan if different maximum levels are needed.
• Choosing the right funding mechanism: Selecting the appropriate funding mechanism — fully insured or self-funded — is crucial. Self-funded plans offer flexibility and cost control, ideal for larger organizations, while fully insured plans provide predictable costs and simplicity, better suited for smaller organizations.

Adding value in a competitive market

Amid economic uncertainty, it’s more important than ever for employers to offer benefits that deliver real value. Dental insurance plays a vital role in supporting employee well-being, and it can also boost talent acquisition and retention. Recent trends show that dental and vision benefits are among the most sought-after perks for employees weighing job offers (Fractl Employee Benefits Study, 2016).

Your next steps as an employer

While inflation presents challenges, it also creates an opportunity to reassess your approach to employee benefits. By modernizing dental plans, focusing on preventive care, and designing them to your employee’s unique needs, you can create a benefits package that stands out in today’s competitive market. Now is the time to rethink your dental benefits strategy and ensure your employees have access to care that supports their health and your bottom line.

For additional guidance, consider consulting with a trusted benefits advisor to help you design plans that meet today’s needs and prepare for the future.

Sources and References:
National Association of Dental Plans
Health Policy Institute
Artemis Health
Healthy People 2030
Fractl Employee Benefits Study