Dental Loss Ratio (DLR)

Understand DLR and what the model legislation means for states in 2024.

Enacting dental loss ratio (DLR) legislation in states is a critical step to tempering the influence insurance companies have over how dentists serve their patients and run their practices. Setting minimum standards of transparency and consumer protection regarding how dental insurers spend patient premiums, as is standard in the medical industry, would go a long way toward improving patient access to the care they need from their dental provider.


An image from above of contestants running a race.
What is model legislation?

Model legislation on medical loss ratio for dental plans gives legitimacy to legislators.

What is Dental Loss Ratio (DLR)?

The portion of insurance premiums spent on patient care rather than overhead is called the “Medical Loss Ratio” or MLR. All states have a minimum ratio for medical insurance because of the Affordable Care Act, but few have a similar standard for dental insurance plans.

The 2022 passing of Question 2 in Massachusetts, requiring dental insurers to spend at least 83% of premiums on patient care or refund the difference to covered individuals and groups, accelerated the momentum for dental loss ratio (DLR) being considered across the country.

DLR drives better patient care through three main objectives:

  • DLR requires dental insurance companies to pay a set percentage of premiums collected on patient care.
  • Ideally, a DLR law will refund part of the premium back if the insurance companies fail to meet the set percentage.
  • DLR requires insurance companies to be more transparent in their reporting of how much they spend on patient care.

Without a Dental Loss Ratio, insurance companies will keep the unspent premiums for salaries or other company overhead rather than on patient care. Patients deserve to have most of their premium dollars spent on the dental care they need.

The NCOIL model for DLR

In January 2024, the National Council of Insurance Legislators (NCOIL) adopted model legislation (PDF) for a medical loss ratio (MLR) in dentistry, or dental loss ratio (DLR).

The model legislation is an agreed-upon starting point for the introduction of state DLR bills across the country in 2024, while leaving the door open for states to find the optimal solution for their constituents.

NCOIL — a national organization made up of legislators, many of whom serve on their states’ insurance and financial committees — discussed its DLR model for more than a year before seeking outside insight.


Myth #1 - The NCOIL model does not meet the current ADA policy.

The model does meet the current ADA policy. In agreeing to the model, the ADA is “supporting legislative efforts…to establish a specific loss ratio” because the model, if enacted, has that eventual result.

Though the NCOIL model does not name a loss ratio in the language itself, it uses a formula to establish the specific loss ratio. For dental plans found to be outliers in their states, meaning that comparably they are not spending enough on enrollees’ care, a loss ratio is set based on the average loss ratio of state dental plans.

Once the loss ratio is set on the plan, the plan does not “escape” for good behavior. It is set and remains specific.

At the end of the day, the goal of both the ADA policy and the NCOIL model is to increase the number of patients being covered by dental plans that must adhere to MLR standards.

Myth #2 - It takes 7 and a half years before any plan is disciplined.

First, the model gives dental plans up to 3 1/2 years to comply.

Second, no dental plan wants to be labeled an outlier. It puts them at a competitive disadvantage because being an outlier doesn't look good to employers who purchase benefit plans for their employees. Just one year after enactment of the NCOIL model, a state's Department of Insurance would need to identify outlier plans by reviewing each dental plan's DLR for the past few years. The dental plan would have one year to increase its DLR, and if the increase is not enough, the state must establish a DLR equal to at least the average of all plans in the market segment to which the outlier must now comply.

There is also the free market impact on dental plan behavior to consider. Due to free market pressure, dental plans would likely act by increasing their DLR or pulling out of that state to avoid being labeled as an outlier. In Massachusetts, some plans have left the market stating they cannot meet the designated DLR.

Therefore, while the law technically gives 3 1/2 years to comply, real progress should happen sooner.

Myth #3 - The NCOIL model is unchangeable and is the ceiling for states.

The NCOIL Dental Loss Ratio model serves as a new floor that takes the conversation at the state level beyond “reporting-only” MLR bills – bills that only require transparency from insurers about patient care spending.

It has been shown that transparency alone does not motivate insurers to improve their investment in patient care. Pairing transparency with enforcement mechanisms will force low-value insurers to quickly shape up or refund money.

We encourage states to go further than the model when possible by establishing a firm standard for MLR rates within dental insurance in their states.

Evidence shows that so far in 2024, 25 bills have been introduced in 13 states. Many state dental societies have been pushing for and seeing enacted legislation on other dental insurance reform issues that go beyond NCOIL model language. This includes recent examples in Oregon on Network Leasing and Kentucky on Noncovered services.

Like ADA policies, NCOIL models come up for reevaluation every 5 years. We are currently seeking member feedback on the ADA’s MLR policy. Visit ADA.org/MLRComment to find the comment submission form to provide your feedback on the current ADA policy on medical (dental) loss ratio.

Myth #4 - There are no wins in the model.

Wins in the DLR model legislation include:

  • protection from dental plans raising their premiums purely because of a DLR being set.
  • language that says a state department of insurance will set a loss ratio for a dental plan if it is determined to be an “outlier” for having a low dental loss ratio.
  • excellent reporting and transparency standards consistent with the Medical Loss Ratio established under the Affordable Care Act.

It’s important to note that insurers were hoping to have a “reporting-only” model adopted at NCOIL, which would have hindered states’ progress on DLR. Thanks to ADA’s involvement, this model legislation sets the bar much higher.


Myth #5 - It is possible to pass ballot measures like Question 2 in Massachusetts in every state.

There are only 14 states that allow for “direct” ballot measures where the voters can initiate a ballot question and make it law. Even in those 14 states, ballot questions are a risky and expensive endeavor, and rules vary on how the measure can be brought to the ballot and approved.

For example, in Nevada the same measure must be passed twice in a row by voters, otherwise it fails. If the measure fails, the chances of success in the legislature drop substantially, and the issue likely will not be considered again for quite a while because legislators will feel that “the voters have spoken.”

The ADA is actively supporting the state dental societies in pursuing dental loss ratio legislation in their states. Already in 2024, 25 bills were introduced in 13 states.

In those states where a ballot measure is possible, the dental societies may decide to pursue that option if they have exhausted the legislative option. That is what occurred in Massachusetts, where nearly the exact content of Question 2’s legislative language was filed as a bill in 2015, 2017 and 2019 – all of which ultimately failed.