- What to look for
- Your family’s needs
- Poor oral health affects job performance
- Why employers should offer dental benefits
- Direct Reimbursement (employer funded plans)
- Managed care: A consumer’s perspective
Elements of a good dental plan include:
- Affordability: Due to the dental profession’s promotion of fluoride, sealants and other preventive care, oral health in America has improved. The cost of dental treatment has increased less than medical care, physician services and hospital room rates.
- Prevention: The vast majority of dental disease is preventable. Preventive care is especially important since dental disease does not heal itself.
- Cost-effectiveness: Dental decay or disease that is detected early has lower associated treatment costs.
- Predictability: Although the need for dental care varies greatly among individuals, the dental needs of an employee group are highly predictable. For this reason, a dental benefit can be self-funded. The risk of wide fluctuations in cost and utilization, evident in many medical benefits, is rarely observed with dental statistics.
Traditionally, dental benefit plans permit patients to receive treatment from a licensed dentist of their choice.
Fee-for-service plans pay the benefit on a service-by-service basis rather than on a salaried or capitation basis. They are often called UCR (usual, customary, reasonable) plans. The benefit pays on a set percentage of the lesser of the dentist’s fee or that fee which has been determined to be “customary” or “reasonable”.
The insurance company determines what is customary, the percentile on which the payment is based. Frequently, it is based on the 90th to 85th percentile. That means the payer will honor claims in full if they do not exceed the specific percentile. This is fiscal management device that allows payers to limit the dollar consequences of their plans. The patient is responsible for the difference between what the plan pays and the dentist’s charge.
The three categories of treatment that included in a good benefit plan are:
- Preventive, Diagnostic and Emergency Services: Preventive dentistry refers to the dental procedures that prevent the occurrence of oral disease. Diagnostic services are those that detect the presence or absence of disease.Both preventive and diagnostic services are vital to the oral wellness of the public and should be considered an integral part of any company’s program. By providing access to these services, employers can realize long-run cost-containment. Services include oral examinations, cleanings, X-rays, fluoride applications, sealants and space maintainers. The American Dental Association and WDA recommend this category of treatment be covered 100 percent with no deductibles or co-payments.
- Routine Dental Care: Routine dental care covers a range of dental treatments since the routine needs of employees in any company will vary considerably. A dental benefits plan should include routine restorations, oral surgery, periodontics and root canal therapy. Coverage for this category of treatment is frequently at 80 percent.
- Complex Dental Care: Complex dental care generally involves more involved and/or extensive procedures such as dentures, bridges, orthodontics. Coverage for this category of treatment is frequently in the 50 percent payment range.
In addition to the three categories of treatment included in a good benefit plan, there should be patient participation in the payment through copayments. This is because when one has personal responsibility to assist with payment, one values the benefit received.
Most dental plans are designed to be of “assistance” in paying for dental services, not 100 percent coverage for every procedure needed.
Additional things to consider when choosing a plan for your family include:
- Will they have to change dentists?
- If they have to choose a dentist from a list of providers, they should consider where the dentist they choose is located.
- Can they choose the dentist to whom they want to go for their care?
- Does the plan allow freedom to choose a specialist?
- Ask friends and neighbors about the plan the family is considering.
Poor oral health can lead to lost work hours. Dental disease does not go away and only gets worse without proper care. Professional intervention is necessary to halt decay or disease progress.
Thus, treating problems early and before they require extensive (and expensive) attention can save money. For example, a small cavity left untreated becomes a bigger cavity that requires a large restoration that could cost twice or three times more.
A large cavity left untreated could lead to a root canal or extraction. Either way, the employee looses work, because a root canal requires several visits to the dentist. If the tooth is pulled, the decision must be made about a replacement (e.g., crown, bridge). These procedures can cost several hundred dollars.
Untreated dental disease does not go away. Early detection and treatment saves time and money.
- Dental treatment is relatively low-cost. It makes economic sense to provide a dental benefit package.
- Dental benefits help individuals by paying for a portion of the cost of their dental care.
- Employee absences or poor work performance may be attributed to poor dental health. According to the National Center for Health Statistics, each year, one in 10 individuals experience a restricted day, bed day or lost work day due to dental disease.
- Dental benefits can enhance a collective bargaining package. Having a dental benefits plan helps recruit and retain employees. Dental benefits are consistently cited as one of the most sought-after employee benefits. Dental coverage has been ranked one of the top five benefit factors weighed by employees considering job offers.
- There are a variety of dental plans giving plan purchasers more options and a range of benefit levels.
- Dental benefit plans promote oral health. History has shown that dental benefits have played an important role in improving access to dental care for millions of Americans.
Both large and small employers have implemented Direct Reimbursement programs to assist employees in meeting the costs of their dental care. Simply put, DR plans are those funded by the employer rather than an insurance company. For example, an employer might agree to pay 80 percent of up to $1,000 per year, per employee for dental care.
A DR plan calls for direct reimbursement to employees for any incurred dental expense, or a specified portion thereof, during a plan year, upon presentation of a paid receipt from the treating dentist. Benefits are expressed in maximum dollar limits per year or a percentage thereof, rather than on a list of covered services.
DR plans are self-funded, so no insurance company is involved in the design, marketing or administration of a DR plan.
How does it work?
A company, assisted by a WDA broker to present and establish DR plans, designs the plan that meets their 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. Another option is the employee can bring an invoice for services performed with the employer paying the dentist directly. 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.
- Goes to the dentist of their choice
- The plan is easy to understand
- The paid receipt is presented to the employer and payment is made according to the pre-arranged percentage of the maximum limit
- Typically there are no exclusions other than cosmetic procedures
- Prompt reimbursement from the employer
- Makes the employee a wise dental consumer
- A larger share of the benefit dollar goes to dental care
- No middleman (i.e., insurance company)
- Administrative costs can be reduced from as much as 20-35 percent of the premium dollars, to below five percent
- Cost savings
- Flexibility – employer can design the plan to reflect the corporate philosophy
- Increased employee satisfaction
- Employer assumes control of benefit levels
- Cost is based on actual experience of the plan
- Investment of funds held in reserve, generating additional income
Employers that have established DR plans for their employees testify there are no downsides and say they would not dream of discontinuing their plans. They love the simplicity, flexibility and cost-effectiveness.
Keep in mind that there are numerous designs. These are just a brief look at a few with a wide range of yearly maximums.
100% of first $200 of dental expenses = $200
80% of next $1,000 = $800
Total annual maximum benefits = $1,000
100% of the first $100 of dental expenses = $100
50% of next $500 = $250
50% of next $1,000 = $500
Total annual maximum benefits = $850
50% of the first $1,000 of dental expenses = $500
Total annual maximum benefits = $500
If the company already has an indemnified plan, anywhere from 15-35 percent of the premium goes to the insurance company for administrative and other expenses.
In establishing a DR plan, the company only reimburses for the treatment provided. Therefore, the portion designated for administration is greatly reduced. A DR plan can be administered in-house utilizing about one hour per 100 employees, per month.
There are several computer programs available to assist the company with administering their plan in-house. The WDA has an arrangement with Midwest Dental Benefits, a third-party administrator that manages DR plans for a small monthly rate (about three to seven percent of the cost of the plan).
- Employee participation: Employee participation in the treatment decisions is one of the main factors in achieving cost savings in a DR plan. Upfront payments by employees also contribute.
- Plan design: It is well documented that copayments reduce the overall cost of a plan. Almost all DR 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. Upfront payments also make the patient more aware of the cost of the treatment and their responsibility in purchasing it.
Freedom of choice
A DR 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 DR plan for your employees, contact:
WDA Insurance Programs
6737 W. Washington St., Ste. 2360
West Allis, WI 53214
There are several models of managed care dental benefits plans. A Preferred Provider Organization (PPO) is a contracted plan whereby dentists agree to discount their fees, sometimes as much as 20 percent, as a financial incentive for patients to select their particular practices.
- Reduced premium rates.
- If the patient’s dentist is not a plan participant and the patient decides to remain with his/her dentist, the patient will have a reduced level of benefits.
- The patient will have to change dentists to maintain the full level of benefits.
- The plan may influence provider treatment.
- The patient may have to travel a greater distance to obtain treatment from a contracting dentist.
Capitation is another form of managed care that pays a contracted dentist a fixed amount per enrolled family or patient per month. In return, the dentist agrees to provide a specific level of treatment or scope of benefits to the patients as necessary.
- There are generally very limited out-of-pocket expenses.
- The premium is generally the least expensive dental plan to purchasers.
- Benefits are easily understood.
- The patient’s dentist may not be a participant in the panel of providers. The patient may have to change dentists.
- Patients pay an additional surcharge for some of the more expensive procedures, especially those involving lab fees.
- There is the uncertainty of not knowing if the payment to the dentist sufficiently covers the amount and level of dental care required.
- Patients are required to obtain treatment from designated clinics or dental offices. It is not uncommon that the patient does not see the same dentist every time they go to the dentist.
- Depending on the specific design of the plan, specialty care and referrals may be excluded or severely restricted.
There is some question as to the effect of the capitation model on dentists’ treatment decisions since the payment is independent of the rendered care. This potential conflict between the patient’s and dentist’s interests could result in under treatment, pacing of necessary treatment or other situations leading to friction in the doctor-patient relationship.