A Basic Guide to Buying Dental Coverage

— Background —

Research shows  a distinct link between maintaining good oral health and a person’s overall health.  Studies suggest there are relationships between periodontal diseases and systemic illnesses, such as cardiovascular disease, respiratory illness, diabetes, and pregnancy complications.  Research also substantiates that regular visits to the dentist can help in the early detection and management of serious physical illnesses, such as diabetes and oral cancer. Dental benefits can play a vitally important role in the health and wellness of your employees. That’s why it’s so important for employers to take a close look at dental benefits carriers and their plan designs to ensure they select the plan that is both cost effective and health effective.

Today there are more options than ever for companies interested in adding dental benefits to their portfolio. This basic guide provides a brief description of what you should consider when making this important benefit decision for your company and employees.

— Types of Plans —

In today’s market, there are many options for companies interested in purchasing dental benefits for their employees, ranging from traditional dental plans to discount or referral type programs. Such plans may be offered on a non-contributory basis where the entire cost of the program is paid by the employer, a contributory basis where the employer and employee share the cost, or a voluntary basis where the entire cost is paid by the employee through payroll deduction.

— Traditional Dental Plans —

The traditional or “indemnity” dental plan is the original dental benefit or fee-for-service plan. Traditional plans permit employees to obtain services from any dentist and do not have dentist networks. Payment for covered services is generally based on the lower of the dentist’s submitted charge or the maximum allowable charge (sometimes called the usual, customary, and reasonable fee or “UCR”). Dentists can bill for the balance of amounts above the maximum allowable charge or UCR since they do not hold a contract with the insurance carrier. The plan cost is determined by the scope of covered services, the plan’s annual maximum, and the level of cost the employee shares through deductibles and coinsurance. (See “Other Dental Plan Features.”)

Traditional plans tend to be more expensive since they do not hold contracts with network dentists to manage fee levels. As an employer, you can manage the cost through the level of deductibles, coinsurance, maximums, and the amount you require employees to contribute toward the plan.

— Dental PPOs —

Dental PPOs are currently the most popular type of dental plan. The dental PPO is similar to the traditional plan, but features a network of dentists who agree not to charge more than the maximum allowable charge determined by the plan. They also agree to abide by other rules established by the carrier. Network dentists are typically evaluated through a “credentialing” process before being permitted to join the network. They are also re-credentialed periodically.

With dental PPOs, employees generally retain the ability to obtain services from any dentist. However, out-of-pocket expenses are usually less when using a network dentist. Some plans provide employees with incentives to stay in the network by waiving or lowering deductibles, reducing any coinsurance paid by the employee, or offering a higher annual plan maximum.

Network dentists also agree to accept the plan’s maximum allowable charge as payment in full. They can only bill employees for out-of-pocket amounts related to deductibles, coinsurance, and maximums. This is an attractive feature since costs are managed through fee levels instead of being shifted to employees. Because non-network dentists do not agree to accept the plan’s maximum allowable charge as payment in full, they can bill the employee for the balance of their full charge.

Dental PPOs are generally less expensive for employers than traditional plans. Employers can manage the cost in much the same way as the traditional plan by determining the deductible amounts, coinsurance levels, and annual maximums.

— Dental HMOs —

A dental HMO is the managed care plan type that has features similar to medical HMOs. In New Jersey, these plans are licensed as “dental plan organizations” or DPOs. Employees generally select a primary care dentist who participates with the dental HMO. The primary care dentist provides general dentistry services to the employee and coordinates referrals to dental specialists also participating with the dental HMO if needed. Employees must receive services from network dentists in order to receive benefits. Benefits are generally not provided for services received from a non-network dentist, except for dental emergencies to relieve pain or treat infection. Most dental HMOs permit employees to change primary care dentists at the beginning of a new month by notifying the carrier in advance.

General dentists are usually paid on a “capitation” basis, receiving a fixed dollar amount for each employee and dependent selecting or assigned to his or her office. Dental specialists usually agree to accept the plan’s maximum allowable charge. Dental HMOs tend to be the lowest cost dental plans, and can provide good value by offering fairly comprehensive coverage. However, dental networks are smaller than those of dental PPOs, and employees must stay in network to receive benefits.

Most plans have copayments for certain services that must be paid to the dentist by the employee. These are generally fixed dollar amounts that are listed in the plan’s benefit booklet. Employers can manage their costs by the selection of a plan that requires higher employee copayments. Lower copayments increase the cost of the plan.

— Options for Employers Unable to Offer Group Coverage —

If you are unable to sponsor a dental plan, employees can still find discount programs or obtain individual coverage.

— Discount or Referral Plans —

Discount or referral plans are not insurance plans. Rather, members obtain services from network dentists who agree to charge members either a scheduled fee or provide a percentage discount from their usual fee. These plans can cost considerably less than insurance plans, but do not offer coverage. Instead, the monthly or yearly charge is much like a membership fee that entitles the member to discounts when using dentists participating in the program.

— Individual Plans —

Individual plans are available in most states. Most plans offer an array of insured plans and discount plans for individuals to choose from.

There are some helpful links at the end of this guide for employees to visit if they are searching for discount plans or individual dental coverage.

— Other Dental Plan Features —

Employers can decide how much they want to contribute to the dental plan. They may decide to offer a “non-contributory” plan and pay the premium in full on behalf of the employee. To lower the employer’s cost of the plan, employees may be required to pay part of the premium such as a percentage or fixed dollar amount. This is known as a “contributory” plan. Many carriers also offer “voluntary” dental plans. A voluntary plan is still sponsored by the employer, but the employee pays the entire cost of the premium through payroll deduction. Voluntary plans sometimes limit the scope of covered services available to employees for a period of time, such as for the first 6 or 12 months of coverage. Called “waiting periods,” they help to moderate the cost of the plan.

— Scope of Coverage —

Within each of the plans, the scope of coverage varies.  Some plans cover diagnostic and preventive services only. Others cover a full range of preventive, diagnostic, basic restorative, major, and orthodontia services. Preventive and diagnostic services usually include dental examinations, x-rays, cleanings, and fluoride treatments (up to a certain age). Basic restorative services may include fillings, root canals, periodontal procedures, extractions, and oral surgery. Major services usually include crowns, dentures, fixed bridges, and sometimes implants.

Below is a sample PPO plan design that lets employees see dentists both in their network and out of network.  This plan type can have many variations.

— Limitations and Exclusions —

Employers should pay close attention to the limitations and exclusions of the plan when shopping for dental coverage. Such limits are needed to keep premiums affordable. There are generally limits on the number of procedures covered in a given timeframe, age limits for certain procedures, non-covered services, and ceilings on the dollar amount that can be paid during the plan year. Often there are dollar limitations on orthodontic services and the benefit amount paid per person per year. The limitations and exclusions should be clearly disclosed in the materials you receive from the carrier.

Below are common examples of limitations and exclusions:

• Oral exams and dental cleanings limited to twice in 12 months
• Full mouth or panoramic x-rays limited to once in 36 months
• Crowns limited to once in 5 years per tooth
• Sealants limited to children 16 or under

Some plans also have “waiting periods.” A waiting period is the time (usually in months) during which benefits will not be paid for certain categories of service. They are most commonly applied to voluntary dental plans, especially when the employer has not had previous dental coverage. Waiting periods help to keep premiums affordable.

Example of waiting periods

Preventive Services………. No waiting period

Basic Services…………….6-month waiting period

Major Services……………12-month waiting period

— Choosing the Right Carrier —

Choosing the right dental carrier is critical. Your insurance broker or consultant can assist you in determining the best network options for your company and its employees. Brokers and consultants also have tools to help you determine which carrier’s network provides the best access for your employees. If you don’t work with a broker or consultant, ask the dental carrier to show you the locations of their network dentists in relationship to the locations of your employees.  Ask if there are any restrictions when employees switch dentists.  In addition, ask about access to specialists for procedures such as oral surgery. Inquire about the credentialing process used to admit dentists into the network. Finally, ask about the dental network’s turnover rate, as this indicates the stability of the network.

— Service Matters —

After you select your company’s dental insurance plan, there are many services that your carrier can provide to you as the employer and also to your employees. Many carriers offer Web-based tools for eligibility, billing, and claims information, as well as information on oral health topics such as prevention, home care, and understanding dental procedures.  In addition, your employees should be able to search for network dentists online.  And don’t forget to ask about the level of customer service provided by live agents should your employees have questions about claims, benefits, or network dentists.

It is important to remember the link between good oral health and your employees’ overall health.  Developing strategies to keep your employees healthy and happy is the best approach to a productive workforce.

— Additional Resources —

For more information, please visit the websites below.

Delta Dental of New Jersey 
www.deltadentalnj.com

American Dental Association 
www.ada.org

New Jersey Department of Banking & Insurance
www.state.nj.us/dobi

National Dental Association 
http://www.ndaonline.org

— For More Information —

If you need additional information, please contact NJBIA’s Member Action Center at 1-800-499-4419, ext. 3 or member411@njbia.org.

This information should not be construed as constituting specific legal advice. It is intended to provide general information about this subject and general compliance strategies. For specific legal advice, NJBIA strongly recommends members consult with their attorney.