Things to Consider Before Selecting or Changing Your Dental Plan
- Fully-Insured or Self-Insured Plan
- Cost Sharing
- Plan Administration
- Who Should be Covered Under the Plan?
Before selecting or changing a dental plan ask yourself the following
- Will employees retain the freedom to choose the dentist they want?
- What type of routine dental care is covered?
- What major dental care is covered?
- How does the plan cover diagnostic and preventive services? Will it cover preventive services such as sealants and fluoride treatments, which may save patients money in the future? Will it provide for full-mouth x-rays?
- Does the plan cover routine dental care, like crowns, root canals, oral surgery and treatment of periodontal diseases?
- What major dental care is covered? Does the plan cover dentures, fixed bridges, implants or treatment for temporomandibular disorders?
- Does the plan cover orthodontic treatment? What limitations are there on age or multiple stage treatment? Is there a lifetime maximum?
- What limitations does the plan place on pre-existing conditions like missing teeth and existing prostheses?
- Will the plan allow for care by specialists? Is coverage limited to contracted specialists, or may patients see the specialist of their choice?
- How does the plan provide for emergency treatment? Is there coverage when a patient must see a non-contracted dentist after hours or while traveling?
- What proportion of the premium dollars paid by employers or beneficiaries goes to actual treatment? What proportion goes to administrative expenses?
Should your company self-insure its dental plan or purchase a fully-insured plan? It’s an important decision to make, as it can considerably affect benefit expenses and the company’s available funds. Some things to take into consideration are the number of covered employees, the location of employees and the amount of risk the company is willing to assume.
Fully-insured dental plans are typically business arrangements between an insurance company and an employer. Most plans are designed to pay only a portion of the patient’s dental expenses. In a fully-insured plan the employer pays a monthly “fixed” premium to an insurance carrier. The insurance carrier assumes all of the risk associated with the claims of the employees, no matter how many claims are incurred. If there are any unused premiums dollars at the end of the plan year they become assets of the insurance company and not the employer. In a fully-insured group plan, the insurance carrier agrees to provide coverage to the employees subject to various conditions. The carrier is responsible for all plan decisions and any legal actions are directed to the carrier.
In a self-insured plan, the employer generally has more flexibility. It can determine what dental expenses will be covered and make other decisions about the design of the plan. The employer’s plan pays employees’ claims, as the claims are incurred. Employers that do not want to process the claims in-house may choose to have an agreement with a third-party administrator (TPA), or an “administrative services only” (ASO) agreement with an insurance company to process the claims. However, in an ASO agreement the insurance company’s standards and procedures will usually determine what benefits are covered, even though the plan is self-insured. A federal law known as the Employee Retirement Income Security Act of 1974 (ERISA) sets rules for most self-insured plans. ERISA plans are governed by the US Department of Labor and are exempt from certain state insurance laws. An ERISA plan may also be subject to HIPAA and other federal and state laws.
In summary, when deciding whether to self fund or fully insure a dental benefit plan, remember the following important points:
- Dental disease is preventable.
- Early detection and treatment of dental disease is most efficient and least costly.
- The need for dental care is universal and ongoing rather than episodic.
- The public’s need for dental care is highly predictable.
- The dental needs of individuals within a specific group, however, may vary considerably.
To control rising premiums for dental benefits, employers have looked for ways to share costs with their employees. One way of sharing costs, is to require employees to contribute towards the cost of their coverage.
When the cost is shared by both the employer and the employee, the cost of the plan to the employer will be greatly reduced. Two ways that the cost of the plan can be shared between the employer and the employees are through premium contributions and through co-payments, co-insurance, deductibles and annual maximums.
Insurance premiums are determined by the insurance company and often regulated by the state. Usually insurance premiums are billed and paid on a monthly basis. Employers may require employees to share the cost of the plan premium. The employer will pay a portion of the premium and the employees may set aside pre-tax money to pay for the remaining premium through payroll deductions.
A dental plan can also be a voluntary plan sponsored by the employer, but with the premiums paid 100% by the employee through payroll deductions.
Any payment made by employees for their coverage in a self-insured dental plan can still be handled through payroll deductions. Instead of being sent to an insurance company for premiums, the contributions are confined by the plan until claims are paid, or put in a trust that is allocated by the plan.
Co-payments, Co-insurance and Deductibles:
A co-payment, or “co-pay” as it is sometimes called, is a flat fee that the patient pays at the time of service. The fee is usually small. Co-payments are common in capitation plans, e.g. dental health maintenance organization (DHMO) plans, and in preferred provider organization plans (PPOs).
In many plans, patients must pay a portion of the services they receive. This payment is called “co-insurance” and is usually a percentage of the service cost after the plan pays benefits. For example, if the plan pays 80 percent of the cost, the patient pays 20 percent of the cost. If the plan pays 50 percent, the patient pays 50 percent, and so forth. Co-insurance is common for PPO products and less common in DHMOs.
A deductible is a flat amount that the employee must pay before they are eligible for certain benefits. The deductible may be an annual or a one-time charge.
Generally, the greater the co-payment, co-insurance and deductibles are, the lower the premiums will be.
The time and money you’ll need to spend managing your plan is a cost that you will also need to consider. Plan administration usually includes enrolling and disenrolling participants (employees and dependents), COBRA and HIPAA administration, and dealing with billing, eligibility and claims problems among other duties. A broker can provide many of these services. A broker can assist with claim issues and billing problems, assist with late enrollees, handle conversion policies, report monthly claim experience and conduct new employee educational meetings. When working with a broker, be sure to discuss with him what administrative duties he’ll assume, and which will remain your responsibility.
In addition to covering employees, many dental plans cover spouses and dependents as well. Some dental plans require that new employees work a minimum amount of time (for example, 30 days) before coverage begins. Although the employer generally has the right to determine which employees will be covered, if the plan is self funded, IRS or ERISA rules limit the extent to which employees may be excluded because they are part-time, or have not reached a certain age or worked for a minimum period of time.
In addition, the Affordable Care Act (ACA) may require that a plan cover dependent children until age 26. If applicable, former employees who have elected COBRA coverage will remain covered for a period of time.
The ADA recognizes the importance of extending dental benefits to retirees and encourages plan purchasers to consider the continuation of dental coverage for retiring employees if it was offered in the past, or as an option for retirees to purchase at their own expense if it is not part of an employee retirement package.