Last updated on May 13th, 2019 at 02:33 pm
Subtle yet important trends are reshaping dental benefit plan designs as employers continue to search for ways to keep costs in line while having a minimal impact on what they offer to their employees. Higher deductibles, lower plan coinsurance, adoption of preferred provider organizations (PPOs) and switching certain procedures from one category to another are among strategies being used by some employers.
Interestingly, though, one strategy is almost never being used – dropping dental benefits completely. Employer-sponsored dental insurance programs remain a highly sought-after benefit by employees.
Despite all the talk about a revolution in health care delivery and payment systems, however, changes in dental benefit programs are coming at a relatively slow pace. In part, that’s because the cost increases associated with dental coverage have been minor compared with medical, usually in the 5 to 9 percent range. Medical costs have frequently gone up 15 to 20 percent or more annually.
So, employers are taking bolder steps to shift those costs of medical coverage to employees, and in many cases are leaving their dental program unchanged as a way of blunting the impact of changes in the medical plan.
Here are the four biggest trends in dental benefit plan design:
While many employers continue to offer dental plans with no deductibles, an increasing number now require a commitment from employees, and the level of that deductible has been slowly but steadily rising. In the past five years, the percentage of employers offering plans with a $0-$25 deductible has fallen from 63 percent to 55 percent. That decline is expected to continue. Generally, however, most plans continue to offer diagnostic and preventive services with no deductible.
PPO plan designs
Taking advantage of the discounts offered through PPO networks is one way that employers can continue to offer the same level of benefits without a big cost increase. The downside: most PPO networks are relatively small, and employees may resist having to change dentists to avoid having poor out-of-network coverage levels, losing protection against balance-billing and other negatives. That’s much less of a problem with some carriers than others. If your carrier offers a larger network in addition to its PPO network, the plan may provide a "safety net" of protection against balance-billing while offering other network-related advantages.
More self-insured groups
An increasing number of larger groups, generally those with 100 or more employees, find they can save money by self-insuring their group. In this arrangement, the carrier serves only as the administrator of the dental benefits program. The group picks up the tab for claim payments and pays the carrier a relatively small fixed amount per employee per month for administrative services.
Many companies are increasing the share of costs that employees pay for dental premiums. There are still a lot of 100 percent employer-paid plans out there, but the trend is toward shifting at least some part of that cost to employees. Many companies that are introducing dental benefits for the first time are opting for "voluntary" plans, in which the employees pay the full cost of the premium.
Thinking about changing your dental benefits plan? While there’s no "one size fits all solution," here are a three things you should consider.
1. To cut costs, raise deductibles – but don’t lower the employer contribution. Dental benefit plan costs are utilization driven, and utilization rates for the most part are user-discretionary. Raising deductibles discourages utilization. Lowering the employer contribution, on the other hand, tends to reduce participation in the plan but increases utilization, ultimately increasing the cost per covered person.
2. Compare your plan to others. What are other employers in your area, or type of business, offering in their dental plans? Remember, the reason you’re offering a dental plan is to attract and retain good employees. Make sure your plan measures up to those it might be compared with.
3. Ask your agent – or insurance carrier – for suggestions. Don’t change your dental plan just for the sake of changing it, but at the same time, don’t be shy about asking your agent or calling your insurance carrier for ideas about how you can improve your plan to better achieve your goals.
Karen Thompson is vice president of underwriting and actuarial for Delta Dental Plan of Wisconsin.
February 18, 2005, Small Business Times, Milwaukee, WI