Is Vision Insurance Worth It?
At some point virtually every employee or policyholder reviews their insurance before asking themselves the question of “is vision insurance worth it?” Vision insurance, if paid through payroll deduction, is a very small bi-weekly expense, one that few consider even a portion of their budget. Over the course of one or many months and years, however, vision insurance adds up, and it may or may not be worth the cost.
In most cases, the question can be answered with some simple arithmetic, and general common sense. If you do not currently wear eyeglasses or contracts, chances are that your vision insurance plan isn't worth the cost. Instead, you'd probably be better off paying out of pocket (or via a FLEX Plan) for your eye needs. However, just because you currently wear eyeglasses or contacts does not mean, in any way, that you're justified in owning vision insurance.
What it Covers
In most every case, vision insurance is a misnomer, insuring very little and instead offering only discounts and reduced prices on eye clinic visits and eye wear or contacts. Very rarely does vision insurance actually insure damage to the eyes, and eye clinic visits as part of another health condition (diabetes, for example) are paid by health insurance policies. Thus, eye insurance for those who do not wear glasses, but have existing health insurance, is virtually worthless.
Doing the Math
We'll have to do some very simple comparisons to determine whether or not your vision insurance justifies its cost. In order to determine whether benefit is equal to the cost, you'll need to know your benefit levels on your current eye insurance (as well as any out of pocket payments at the clinic), the monthly or annual premiums, and how many people utilize the policy.
This basic math is made easier if you have records at your disposal. Should you have this documentation (always keep medical expense records), record the billable cost, your co-payments, deductible, and your actual out of pocket expenses. If you do not have these records, your eye clinic should be able, and willing, to send you aggregate total receipts at your request.
The billable cost is the total cost of the procedure, eye exam, or other fees that have not yet been discounted by a PPO. Usually, bills from eye exams will reflect the total cost, then the cost less PPO discount. A PPO discount is generally anywhere from 10-30% of the billable cost.
Your co-payments were likely paid at the time of visit, or after the bill was sent to your insurance. Add this total to your annual deductible, which should be listed on your insurance information, or on an insurance card, if applicable.
Finally, subtract the total of your co-payments and annual deductibles from your total cost. This amount is the total amount saved by your insurance in one year. Divide this final number by the number of premium payments you make each year and determine which is larger.
If the cost savings are greater than your monthly premiums, then you should keep your insurance. If the cost savings were smaller, take into consideration any additional coverage (discounts for LASIK or large items, for example) and your likeliness to use this benefit.
Some Final Considerations
In many cases, vision insurance not only aids in the purchase of eyewear, but also more expensive eyewear. Knowing that you have vision insurance is often reason enough to purchase more expensive designer frames, or more eyewear than you may need. Remember that without a change in prescription, eyewear can last as long as you decide to wear your glasses. And should your prescription change, lenses can be found to fit your already existing frames.
People without vision insurance tend to purchase less eyewear knowing that they'll have to pay the full amount due for the glasses, lenses or contacts. Thus, those without insurance spend significantly less out of pocket, and absolutely nothing on insurance, saving even more.
Even with that consideration, chances are that your employer heavily subsidizes the monthly or annual premiums on your insurance, and you pay only a small portion of the total cost. Plus, all insurance premiums taken out of your income are paid with pre-tax, not post-tax, earnings.
The difference here is the difference in your tax rate. A person in a 10% tax bracket would have to earn roughly $556 in income to have $500 in post tax cash. So, as long as the savings from a vision insurance plan are 90% of the cost, there is a benefit, though not always immediately visible, in the form of a lower tax bill. A great deal of people overlook this cost savings.