Both large and small employers have implemented Direct Pay programs to assist employees in meeting the costs of their dental care. 

Direct pay: What is it?

Direct Pay (DP) is an innovative method of self-funding whereby the plan reimburses employees for any expenses incurred, or a specified portion thereof, during a plan year. Benefits are expressed in maximum dollar limits per year or a percentage thereof.

DP plans are self-funded. That means that no insurance company is involved in the design, marketing or administration of a DP plan. DP plans are stated in dollar maximums and percentages of the maximum per year. They differ from a traditional plan in that there is no list of covered and non-covered services. All treatments are covered depending on the amount of funds that remain in the employee's dollar yearly limit.

How does it work?

A company, with the assistance of one of the brokers working with the WDA to present and establish DP plans, design the plan that meets the employer's financial commitment.

The employee goes to the dentist of their choice, pays the dentist's bill and submits a copy of the paid receipt or paid bill to the appropriate person at the company for which he/she works. The employer reimburses the employee according to the plan specifications. There are no claim forms, no submission of X-rays, no waiting for the return of a pre-determination. Treatment decisions are made according to the patient needs in consultation with the dentist.

Advantages of a direct pay plan: Simple and flexible

Because Direct Pay is so simple and flexible, plans are tailored to the employee and employer needs. There is no set DP plan. DP is not a product. It is a concept that is reflected in the plan design. Percentages and maximums are dependent upon the degree of financial commitment the employer is prepared to make.

Having stated the above, here are several DP plans as samples. Just keep in mind that there are numerous designs. These are just a brief look at a few with a wide range of yearly maximums.

Option I

100% of first $200 of dental expenses $ 200

80% of next $1,000 $ 800

Total annual maximum benefits $1,000

Option II

100% of the first $100 =$ 100

50% of next $500 = $ 250

50% of next $1,000 = $ 500

Total annual maximum benefits = $ 850

Option III

50% of $1,000 = $ 500

Total annual maximum benefits = $ 500

Cost-effectiveness

• Employee participation: Employee participation in the treatment decisions is one of the main factors in achieving cost savings in a DP plan. Up-front payments by employees also contribute.

• Plan design: It is well documented that copayments reduce the overall cost of a plan. Almost all DP plans identify copayment levels that the employee must pay. There is always a maximum. After the maximum has been reached, any further costs are born by the employee. Modest plans are designed when plans are initiated. After the company has a year or two of experience, they can either increase the yearly maximum or decrease the copayment requirements for the employee.

• Market nuances: The dental market in an area will dictate cost containment measures. As patients become wise consumers, they tend to shop around for the best value for their limited dental benefit allowance. Up-front payments also make the patient more aware of the cost of the treatment and their responsibility in purchasing it.

Freedom of choice

A Direct Pay plan gives employees the freedom to visit the dentist of their choice. The employee and dentist decide on the needed care. There are no limitations on pre-existing conditions nor are there exclusions for certain services.

For more information on how you can set up a DP plan for your employees, contact Tom Witkowski via e-mail to tomwit@execpc.com, at 414-755-4150, via fax at 414-277-1124 or mail your request to:

WDA Insurance Programs, Inc.
Attn: Tom Witkowski
6737 W. Washington St., Ste. 2360
West Allis, WI 53214