Adding dental benefits can be cheap and effective.
By Todd Shryock
Looking to enhance your benefits package on a limited budget? Consider adding a dental plan.
If you may think that dental plans are only offered by Fortune 500 companies and are out of reach for the average business, you might be surprised.
"Dental benefits are an easy way for an employer to get the attention of employees," says Robert Winzler, president of R.G. Winzler and Associates, a Cherry Hill, N.J.-based benefits consulting firm. A dental plan can help keep current workers and recruit new ones, and the administration burden is minimal.
"It's really a lot less than medical insurance," notes Winzler. "The claims are a lot more straightforward and less complicated."
Dental insurance is not only a popular addition to a benefits package, it's also cost effective. Premiums for a dental plan are usually about 15 percent of those for medical coverage. Plans are also available that require no employer contribution, yet because the cost is so much lower than medical insurance, it's still an affordable option for many employees.
Medical insurance is designed primarily to cover the costs of diagnosing, treating and curing serious illnesses. The process can be complicated, and can involve several physicians, testing facilities, laboratories and expensive medication.
Dental insurance works differently. The focus of most dental coverage is preventive care, something medical HMOs and other forms of managed care have tried to imitate. Dental care rarely requires the complex treatments of some medical ailments. An examination and a set of X-rays are all that is usually required, which limits the costs of care. Because most dental disease is preventable, dental benefit plans are structured to encourage patients to get regular care. Most plans require patients to assume a greater portion of treatment costs for dental disease than for preventive procedures.
Dental plans each have their own method for patients choosing their dentists:
- Open panel. This type of dental benefits plan allows covered patients to receive care from any dentist and allows any dentist to participate. Any dentist may accept or refuse to treat patients enrolled in the plan. Open panel plans are often described as freedom-of-choice plans.
- Closed panel. This type of plan allows covered patients to receive care only from dentists who have signed a contract of participation with a third party. The third party contracts with a certain number of dentists within a particular geographic area.
There are two types of closed panels:
- Preferred Provider Organization. This plan allows a particular group of patients to receive dental care from a defined panel of dentists. The participating dentists agree to charge the patient base less than usual, providing savings to the plan purchaser. If the patient chooses to see a dentist who is not on the panel, that patient may have to pay more of the fee.
- Exclusive Provider Organization. This closed panel plan allows a particular group of patients to receive care only from participating dentists. Although there may be some exceptions for emergencies, if a patient decides to see a dentist not listed by the EPO, charges for the service will not be covered by the plan. Because dentists are required to offer substantial fee reductions, many dentists elect not to participate in EPOs. Under some plans, the dentists may be salaried employees of the EPO. Access to specialized care may be restricted, and there may be limitations on the amount of services a patient can receive in a year.
When choosing a plan, it is important to know how the payments are set up. The two most common types are indemnity and capitation.
Indemnity plans pay the dentist on a fee-for-service basis. Employers pay a monthly premium to an insurance carrier, which directly reimburses the dentist for any work done. Insurance companies typically pay 50 percent to 80 percent of the dentist's fee, while the remaining amount is paid by the employer or patient. These plans usually have a deductible that must be met before any care will be paid for by the insurance company.
Capitation plans pay the dentist per patient rather than for actual treatment provided. Participating dentists receive a fixed monthly fee based on the number of patients assigned to the office. Patient co-payments may be required for each visit.
While cost may be a primary consideration when choosing a dental plan, also determine whether your needs and those of your employees will be met. Consider the following questions when choosing a plan:
- Does the plan give you the freedom to choose your own dentist or are you restricted to a panel of dentists selected by the insurance company?
- Who controls treatment decisions-you and the dentist or the dental plan?
- Does the plan cover diagnostic, preventive and emergency services? If so, to what extent?
- What routine corrective treatment is covered by the dental plan? What share of the costs will be yours? A broad range of treatment can be defined as routine, so make sure you see a list of what the plan considers routine treatment.
- What major dental care is covered by the plan? What percentage of these costs will you have to pay? Many plans cover less than 50 percent of the cost of major treatment.
- Will the plan allow referral to specialists? If so, who chooses the specialist?
- Can you see the dentist when you need to, and schedule appointment times convenient for you? Closed panel or capitation plans may have dentists with preselected hours to see plan patients, or limit them to given days.