Dental Insurance

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How To Choose Dental Insurance

Selecting an Appropriate Plan

Deciding on whether to purchase dental coverage and selecting from countless regional and national dental plans can seem like a daunting task. Whether you are considering small business, group, individual or family dental insurance, the information that follows can help guide you through the decisions. This article offers an overview of why dental insurance is important and cost effective and explains the different types of dental plans, including direct reimbursement, indemnity, preferred provider organization (PPO) , dental health maintenance organization (DMHO) , discount/referral or reduced fee for services (RFFS) and point of service (POS) plans. Points to consider and questions to ask before purchasing a particular type of plan are provided. For instance, will you be able to choose your own dentist? Are services such as root canal or orthodontia covered? The article also explains the difference between fully insured and self-insured plans and defines fee for service versus managed care dental insurance. In addition, preexisting conditions, usual and customary (UCR) and least expensive alternative treatment (LEAT) are discussed. For employers, a special section addresses participation, dependents, COBRA and retirees. Many request dental insurance free quotes and compare dental plan benefits and rates to help them select an appropriate plan to suit their needs.

Selecting an appropriate dental plan requires careful thought and research. The best plan for one company may not be the best plan for another. The process of sorting through the intricacies of different plan types can sometimes seem daunting, even to experienced benefits professionals.This article is intended to inform decision-makers about the variety of dental plans in the market, in order to ensure that high-quality and affordable dental care is available to your employees. It also offers specific questions to ask before changing or selecting a new dental plan.

By Thomas D. KillamOffering a dental benefits plan makes good business sense. A frequently overlooked reason for employee absences or poor work performance is dental disease or discomfort. And as an employer knows, days lost means money lost.

Moreover, in addition to promoting oral health, 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.

Fortunately, offering a dental benefits plan to employees can be affordable. Most dental disease is 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. Moreover, 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.

Before Selecting or Changing Your Dental Plan

Before selecting or changing a dental plan, there are some important things to consider. 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 dental expenses. However, dental plans may exclude or discourage certain treatments, such as dental sealants, which can prevent tooth decay and save money later on. Carefully read the plan and know its limitations. If a plan doesn't cover a specific procedure, this does not mean that the treatment isn't appropriate or needed.

In a self-insured plan, on the other hand, the employer generally has more flexibility to determine what dental expenses will be covered. However, many self-insured plans are administered by insurance companies under an "administrative services only" (ASO) agreement. In such cases, the insurance company's standards and procedures will usually determine what benefits are covered, even though the plan is self-insured.

Additionally, some plans do not cover conditions that existed before the employee became hired, such as missing teeth. Others may not cover dental implants, specialist referrals and other dental needs. Even when a dentist and patient agree on the appropriate treatment method for the 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 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 pay for only the least expensive alternative treatment (LEAT)?
  • To what extent 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 regular dental exams and cleanings? 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 your employee is away from home?
  • If the plan requires monthly premiums, what percentage of that money goes to actual care and not to overhead or administration?

Dental health is a key factor to preserving a person's general health. While dental benefit coverage should be taken into account, it should not be the deciding factor in determining one's choice of treatment.

Dental Benefit Plan Models

There are numerous models of dental plans. In general, they can be divided into two categories: fee-for-service and managed care.

Fee-for-service dental plans

These are typically freedom-of-choice arrangements under which a dentist is paid for each service rendered according to the fees established by the dentist.

Managed care dental plans

These are cost containment systems that direct the utilization of health care by

  1. restricting the type, level and frequency of treatment;
  2. limiting access to care; and
  3. controlling the level of reimbursement for services.

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.

The design of the DR plan is selected by the employer to fit the employer's budget, and can therefore vary accordingly. For example, one plan may reimburse 100% of the first $200 of dental expenses and 80% of the next $1,000, resulting in a total annual maximum benefit of $1,000 per covered employee. Another company may reimburse 75% of the first $1,000 of dental expenses, resulting in a total annual maximum benefit of $750 per covered employee. The totals can be individual or family maximums.

DR plans can be administered either in-house or by a third-party administrator.
A DR plan may also permit employees to pay their share of their dental expenses on a before-tax basis by establishing dental "flex" accounts. Flex accounts are funded by employees with pre-tax paycheck withholding, and can be used to pay dental expenses that are not covered by the employer. In addition to the employee's tax savings, the employer benefits because the amounts withheld from the employees' paychecks are not subject to FICA taxes. Flex accounts must comply with IRS regulations to insure that the payments qualify for pre-tax treatment.

If you are considering a Direct Reimbursement dental plan, the following questions should be addressed:

  • What co-payments and annual maximum should be established?
  • Will the plan be administered in-house or by a third party?
  • What records will be useful to keep?
  • What percentage of the cost will go toward administration? (Experience shows that between 5% and 10% of the money spent on DR will go to administration.)
  • What safeguards and educational programs are in place to ensure that employees use their dental dollars wisely?

Indemnity

An indemnity plan is a fully insured or self-insured plan where an assigned payment is provided for specific services, regardless of the actual charges made by the provider. Payment may be made to enrollees or, by assignment, directly to dentists.

Usual, Customary and Reasonable (UCR) indemnity plans usually allow patients to go to the dentists of their choice. These plans pay a set percentage of the dentist's fee or the plan administrator's "reasonable" or "customary" fee limit, whichever is less. These limits are the result of a contract between the plan purchaser and the third-party payer. Although these limits are called "customary," they may or may not accurately reflect the fees that area dentists charge. There is wide fluctuation and no regulation on how a plan determines the "customary" fee level.

If the plan purchaser is reviewing an indemnity dental plan with a UCR schedule, the following are points to consider:

  • What data has been used to establish the UCR fee levels? How often are the fee levels updated?
  • At what percentile is payment made? For what percentage of claims in the last year has the plan denied patients coverage for a part of their dentist's charges because of the "customary" fee screen?
  • What percentage of the premiums is used for administration and not for dental care?

Table of Allowance

Table of Allowance (sometimes called "schedule of allowance") indemnity programs determine a list of covered services with an assigned dollar amount. That dollar amount represents just how much the plan will pay for those services that are covered. Most often, it does not represent the dentist's full charge for those services. The patient usually pays the difference.

If a plan calculates benefits according to a table of allowances, the purchaser should consider the following:

  • What is the difference between the allowed coverage and a typical dentist's fee for the listed procedures? What is the level of benefits?
  • What provisions are in the plan for adjusting the table for inflation and changes in dental procedures?
  • What provisions are in place for determining coverage for necessary procedures that are not included in the table?

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 into 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?

Other Types of Dental Plans

The following two plan types also are common in the market. These plan types rarely stand alone, however, and are generally featured as aspects of other plans.

Discount/Referral Plans are arrangements in which employers direct employees to a limited number of providers who have agreed to discount their normal fees in exchange for a larger patient pool. There is no reimbursement to the patient or to the provider. A third-party marketer will package and sell a discount program for a fee, in order to cover costs and profits.

Point of Service Plans are arrangements in which patients with a managed care dental plan have the option of seeking treatment from an "out-of-networ"” provider. The reimbursement for the patient is usually based on a low table of allowances, with significantly reduced benefits than if the patient had selected an "in network" provider. Who Should be Covered Under the Plan?

In addition to covering employees, most dental plans cover spouses and dependents as well. Some dental plans require that new employees work a minimum amount of time – for example, six months – before coverage begins. Although the employer generally has the right to determine which employees will be covered, if the plan is self-funded, IRS 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.

Also, most plans will terminate coverage of dependent children at a certain age: for example, at age 19 or until completion of academic studies. If the company has 20 or more employees, the federal law known as "COBRA" may require that employees or their dependents who would otherwise lose coverage be permitted to continue the coverage at their own expense for periods of up to 36 months. Even if the company has fewer than 20 employees, many states have similar laws.

Finally, many companies are encouraged to offer 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 currently part of an employee retirement package. Conclusion

In the end, employers can conduct a common sense cost-benefit analysis in order to determine the best value for their dental plan dollar. There may be a trade-off when it comes to cost and quality in a plan. Also, taking into consideration the company's corporate philosophy and the employee demographics will help to make the most appropriate decision as to which plan will work best.

Once you've got an idea of the type of dental plan you're looking for, there are many resources for finding the right vendor. Your broker, benefits consultant and even your state dental society can assist you in getting a plan up-and-running at your company.

Most importantly, be sure to get all your questions answered before you sign a contract. By doing so, you can select a dental plan that satisfies you, your employees, and your bottom line.

Thomas D. Killam is the manager of the American Dental Association's Purchaser Information Service based in Chicago, Illinois.

Dental Insurance

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