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Insurance and Financing

The Advantages of Offering A Dental Benefits Plan

Dental health is a key factor to preserving one's general health. Employers and other plan sponsors offer dental benefits for a variety of reasons. Offering a dental benefits plan makes economic sense. A frequently overlooked reason for employee absences or poor work performance is dental disease or discomfort. And as every human resources professional knows, days lost can mean money lost. A quality dental benefits plan can aid in the recruitment and retention of employees. Dental benefits are consistently cited as one of the most sought after employee benefits.

Most medical needs and treatments are unpredictable, catastrophic, high cost and an insurable risk. Most dental needs and treatments are predictable, non-catastrophic, low cost and low risk. Dental disease is most often preventable; with the exception of damage due to an accident, dental treatment begins with relatively low-cost diagnostic procedures, such as exams and x-rays. If decay or disease is detected, the sooner it is treated, the less expensive that treatment will be. The dental needs of an employee group are highly predictable. For this reason, a dental benefits plan can often be self-funded. Extremes in cost and utilization (evident in many medical benefits) are rarely observed with dental statistics.

Selecting or Changing Your Dental Plan

Before selecting or changing a dental plan, there are some important things to consider. Some plans require patients to choose a dentist from a limited list of dentists. Choosing from a list is not the same thing as freedom of choice. If your dentist is not on such a list, don't hesitate to ask why he or she has elected not to participate.

Dental plans are typically business arrangements between an insurance company and an employer. Most plans are designed to pay only a portion of your dental expenses. However, dental plans may exclude or discourage certain treatments, such as dental sealants, which can prevent tooth decay and save you money later on. Carefully read a plan and know its limitations. If a plan doesn't cover a procedure that is recommended by your dentist, this does not mean that the treatment isn't appropriate or needed.

Some plans do not cover pre-existing conditions, such as missing teeth. Others may not cover dental implants, specialist referrals and other dental needs. Even when you and your dentist agree on the appropriate treatment method for your condition, the contract provision of the dental plan may only pay a portion, or pay only for the least expensive alternative treatment (LEAT) as determined by the insurance company.

Dental plans may use the terms "usual, customary and reasonable" (UCR) to determine the portion of the dental treatment fee they will pay. UCR reimbursement levels are determined by different methods by the dental plan administrators. They may vary a great deal among plans — even when those plans operate in the same area. The fee the insurance company determines to be "customary" may be very low compared to the area's average professional fee for the same services. The plans then generally pay a certain percentage of the UCR level. The patient may then be required to pay a greater portion of the treatment costs.

Ask yourself the following questions before selecting a new plan:

  • Will employees retain the freedom to choose their own dentists?
  • Is the type of treatment determined by the patient and the dentist?
  • Does the plan cover diagnostic, preventive and emergency 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?
  • What type of routine dental care is covered? Does the plan cover crowns and bridges, braces, root canals, oral surgery and treatment of periodontal diseases?.
  • What major dental care is covered? Does the plan cover dentures, implants or treatment for temporomandibular disorders?
  • Will the plan allow for referrals to specialists? If so, will the dentist be limited to a list of specialists from which to choose?
  • How does the plan provide for emergency treatment? What provisions are made for emergency care when you are away from home?
  • If the plan requires monthly premiums, what percentage of that money goes to actual care and not to overhead or administration?

You and your dentist make the decision about treatment. While dental benefit coverage should be taken into consideration, it should not be the deciding factor in determining your choice of treatment.

Dental Benefit Plan Models

There are numerous models of dental plans. In general, they can be divided into two categories: managed care and fee-for-service. Managed Care dental plans are cost containment systems that direct the utilization of health care by a) restricting the type, level and frequency of treatment; b) limiting the access to care; and c) controlling the level of reimbursement for services. Fee-for-Service dental plans are typically freedom-of-choice arrangements under which a dentist is paid for each service rendered according to the fees established by the dentist.

Dental Managed Care Plans

Preferred Provider Organization
Preferred Provider Organization (PPO) programs are plans under which patients select a dentist from a network or list of providers who have agreed, by contract, to discount their fees. In PPOs that allow patients to receive treatment from a non-participating dentist, patients will be penalized with higher deductibles and co-payments. PPOs can be fully insured or self-insured. PPOs are usually less expensive than comparable indemnity plans and are regulated under the appropriate insurance statutes in the company's state of domicile and operation.

  • When reviewing a PPO dental plan, the plan purchaser should consider the following:
  • What percentage of the premium is used for administration?
  • Will the amount of the discount influence patients to change their dentist? Will the amount of the discount the dentist is required to offer affect the number of treatment options for the plan's covered individuals?
  • What is the liability for the employer if the plan influences provider selection or treatment?
  • What are the criteria for selection of providers for the plan? Does it have enough dentists under contract to adequately serve the group? What is the geographic distribution of patients to dentists? Does it provide for specialist referrals? Are dentists limited to referring patients to contracted specialists?
  • How does the program provide for emergency treatment? What provisions are in the program for emergency care away from home?

Dental Health Maintenance Organization/Capitation Plan
Dental Health Maintenance Organization (DHMO) or capitation plans pay contracted dentists a fixed amount (usually on a monthly basis) per enrolled family or individual, regardless of utilization. In return, the dentists agree to provide specific types of treatment to the patient at no charge (for other treatments, a co-payment is required). Theoretically, the DHMO rewards dentists who keep patients in good health, thereby keeping costs low. DHMO models typically offer the least expensive dental plans.

If the plan purchaser is reviewing a DHMO or capitation plan, the following factors should be considered:

  • What percentage of the premium is used for administration?
  • Does the employer have access to sufficient information to determine the level and amount of treatment received by each member of the group?
  • What is the utilization rate for patients in this program? What is the average waiting period for an initial appointment? What is the average period between appointments?
  • What is the dentist/patient ratio for the program? What are the criteria for selecting dentists to participate in the program? What is the geographic distribution of patients to dentists?
  • What is the ratio of dentists accepted to the program to those who applied to participate? How many dentists voluntarily withdrew from the program over the past two years?
  • What is the capitated rate of compensation for the dentists? Is it sufficient compensation for the needs of the covered patient population? What provisions are made for dentists with unforeseen utilization or difficult cases?
  • What are the benefits for patients requiring a specialist's care? How are specialists selected and compensated? Does the plan have adequate specialist participation?
  • How does the program provide for emergency treatment? What provisions are in the program for emergency care away from home?

Dental Fee-for-Service Plans

Direct Reimbursement
Direct Reimbursement (DR) is a self-funded dental benefits plan that reimburses patients according to dollars spent on dental care, not type of treatment received. It allows the patient complete freedom to choose any dentist. Instead of paying monthly insurance premiums, even for employees who don't use the dentist, employers pay a percentage of actual treatments received. Moreover, employers are removed from the potential responsibility of influencing treatment decisions due to plan selection or sponsorship. DR is the ADA's preferred method of financing dental treatment.

Insurance Benefit Gaps

Patients often are surprised to find that their insurance benefits do not cover all the treatment their dentist recommends. Dental insurance benefits for the most part have remained at the same level for more than two decades, leaving patients to pick up any added costs out-of-pocket. In recent years, payment options have emerged to help patients bridge the gap between what their insurance covers and the total cost of care. Most dental practice will accept cash, personal checks or major credit card, but many also offer outside monthly financing programs. These payment plans have rapidly gained popularity.

ADA Business Resources exclusively endorses the CareCredit program. For more information, an online application or to find a dentist who offers CareCredit, go to