I still don't get vision plans

Professional Actuarial Topics General topics
1

Somebody explain me this because I still don’t get it after discussing this at depth on the AO. How are vision plans a viable business? It seems like they don’t cover big losses that you would buy insurance for. Sure, it makes my eyewear cheaper so I have one but how does this make sense?

In order for the plan provider to make a profit, they need to charge more in premiums than they pay out in losses but why would people pay more for “losses” with very low variance? Is this like a gym membership where the company makes money by betting that most people won’t use it?

2

I think it’s just a way for an employer to pay part of the cost of your eyeglasses with pre-tax money.

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3

Why don’t they just pay higher salaries?

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4

taxes

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5

this is likely.

6

Vision Plans don’t even give good benefits.
And, since someone else pays the bill, glasses and exams are more expensive for everyone. (“Look!(p.i) I got $30 off on these now overpriced lenses and frames!”)

Barely insurance, i. m. not-actuarial o.

7

Because they can give you a vision benefit pre-tax.

But it’s a crappy benefit, and it’s not “insurance”.

8

Yep, there are 3 basic advantages to the standard garden variety employer-sponsored Vision insurance. Speaking from a US perspective… no clue on other markets.

  1. Employer pays the bulk of the premium.

  2. The part that you pay is pre-tax.

  3. Vision providers may offer lower prices to you because you have the insurance. Like the rack rate for the eye exam is $200, but insurance allows only $165, and covers $125. So you pay $40, to the eye doctor, plus $50 pre-tax for the premium, which is like only $30 after tax, so you’re out $70 instead of $200. Plus then the insurance will also cover a portion of your lenses and, if applicable, frames.

9

Luxottica gets a lot of my money because I have vision insurance. They own eyemed, our vision provider, and I always end up spending at least $300 of my own money on their frames, and they also own Essilor, the largest maker of lenses. So it sure does work out for them.

10

This is largely true of dental insurance too. Dental insurance is a little closer to actual insurance, but only a little.

When you look at the benefits, it’s usually something like:

100% for cleanings
80% for fillings
50% for root canals and other major stuff

And in no case will they pay out more than $5,000 per person per year.

The biggest value here is the employer subsidy and the pre-tax premium. You could easily self-insure the part they actually cover.

11

Vision insurance is the one I double up on, getting it through both my employer and also hubby’s.

That way I can use one benefit for contact lenses and the other for glasses.

It’s so cheap, it’s better to double insure, even though I’m only getting one eye exam. And they won’t bill both insurers for that, and I can’t get one insurer to cover the part of the exam that the other insurer doesn’t pay for, like medical insurers will do. (For the tiny fraction of the population with dual medical insurance.)

12

I pay around $350 a year for family vision coverage. It definitely would cost me more than that OOP for my husband and me to buy new glasses/lenses every year (which we both do - he does because his vision is changing with age and he needs progressive lenses, and my glasses are a huge part of my personality so I have about 10 pairs and counting) and for our kids to get eye exams every year. If I didn’t wear glasses and have kids, I doubt it would be worth it for me.