How Direct Reimbursement (DR) Works
DR works much like reimbursement for employee expense accounts. In fact, administration is as easy as A-B-C:
- Employee and/or covered dependents receive treatment from a dentist of their choice.
- The employee pays the dentist's bill and presents a paid receipt or proof of payment to the employer or third-party administrator.
- The employee is reimbursed according to the plan design that you choose to meet your company's needs.
There are no monthly insurance premiums-so you pay only when your employees actually visit the dentist. As much as 88-90% of your benefit dollars goes to actual dental care. There are no complex claim procedures or forms to complete. And, employees are free to choose any dentist they like, including their current one. Many third-party administators (TPAs) offer direct assignment, that is, payment is made directly to the dentist.
Compare Direct Reimbursement and Traditional Plans
Of the two dental plans below, which would you rather explain, administer and use?
Direct Reimbursement Dental Plan
Step 1: Choose your dentist
Step 2: Obtain dental services
Step 3: Pay for dental services and submit receipt or proof of treatment and/or simple claim form
Step 4: Be reimbursed for your dental services under the following sample formula:
- 100% of the first $100 of expenses
- 80% of the next $500 of expenses
- 50% of the next $1,000 of expenses
TPA Pays for your dental services under the following sample formula:
Traditional Dental Plan
Step 1: Choose your dentist
Step 2: Obtain dental services
Step 3: Pay applicable copays, deductibles or charges associated with dental services and complete any necessary claims forms and paperwork. The amount covered for each type of dental service is determined under a class structure similar to the plan outlined below. |
 |
DR is for groups
not individuals.
|
| Traditional Dental Plan |
| |
Class I Diagnostic and Preventive Services |
Class II Basic Dental Services |
Class III Major Dental Services |
Class IV Orthodontics |
Reimburse-
ment Levels |
100% |
80% of Reasonable and Customary Charge after deductible1 |
50% of Reasonable and Customary Charge after deductible |
50% of Reasonable
and Customary Charge after deductible2 |
| Services |
Oral Evaluations
Prophylaxis
Fluoride Treatments
X-Rays
Laboratory
Other Diagnostic Tests |
Emergency Treatment
Space Maintainers
Simple Extractions
Surgical Extractions
Oral Surgery
Anesthesia Services
Restoration Periodontics
Endodontics |
Inlays/Onlays/Crowns
Dentures
Other Removable
Prosthetics
Bridges
Other Fixed Prosthetics
Denture & Bridge Repair
Other Prosthetics |
All
Orthodontic Services |
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Customize a DR Plan
A problem with many dental plans is that employees are confused about deductibles and by what's covered and what isn't. DR helps to eliminate the confusion and hassles resulting from employee complaints. How? By basing benefits on money they actually spend rather than on the type of the treatment they receive.
At the same time, you can limit the company's financial exposure with cost-sharing measures like co-payments and maximums. The sample plan designs below illustrate just a few of the ways this can be done.
Sample Plan Designs
These examples illustrate the flexibility of DR. An employer can choose any level of financial commitment initially, and then revise the benefit levels based on experience.
Plan A
Reimburse 100% of the first $100 of dental expense
80% of the next $250
50% of the next $2,400
Maximum Annual Benefit: $1,500 (totals can be either individual or family maximums)
Plan B
Reimburse 100% of the first $100 of dental expenses
80% of the next $250
50% of the next $2,000
Maximum Annual Benefit: $1,300 (totals can be either individual or family maximums)
Plan C
Reimburse 100% of the first $100 of dental expenses
80% of the next $250
50% of the next $1,400
Maximum Annual Benefit: $1,000 (totals can be either individual or family maximums)
Plan D
Reimburse 50% of $1,000 of dental expenses
Maximum Annual Benefit: $500 (totals can be either individual or family maximums)
Assistance in designing a DR plan is available from several sources:
- Many state dental societies are able to assist in designing a DR plan. Contact the ADA at 800-232-1890 or e-mail dentalbenefits@ada.org (include your mailing address) to determine if your state dental association can help you with your DR questions.
- Benefits consultants and insurance brokers frequently have information useful in designing a plan.
- Of course, your attorney and CPA should review and approve the plan before implementation.
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Estimate the Cost of a DR Plan
We know you are concerned about cost, so here are a few things to keep in mind:
- With DR, you pay for actual treatment received instead of paying monthly insurance premiums, even for employees who don't use dental benefits.
- While DR plan costs will vary from month to month, you can request a cost estimate based on an actuarial formula that will help predict long-term costs.
The ADA, along with many state dental societies, benefits consultants, and brokers, can estimate your expenses upon request.
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