Navigating Benefits

Types of Dental Insurance: Choosing the Best Plan for Your Workforce

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Posted by March 7, 2017

Good oral health can have a big impact on the overall wellness of your employees and may also lead to lower medical costs. That’s why choosing the right type of dental insurance for your workforce is so important.

The American Dental Association breaks out the types of dental insurance plans into two main types: fee-for-service plans and managed care plans. There are other types of plans, but these two are the most common. Here’s what you need to know so you can select a plan that fits the needs of your employees.

Fee-for-Service Plans

With a fee-for-service plan, when your employee sees a dentist, his insurance plan will reimburse him for all or a portion of the cost of the treatment.

Fee-for-service plans can be self-funded by the business, which means that the business sets aside an amount of money for dental care and uses that money to pay for treatment. There are also more traditional plans that are known as indemnity plans. With this type of plan, the insurance company sets specific fees it will pay for specific procedures. Indemnity plans also have copays and limits, which will vary from plan to plan.

Which Businesses Do These Work For?

If you want to offer a self-funded plan, you need to make sure you have enough money to fully fund your plan. Otherwise, you could end up in a situation where an employee expects to be reimbursed but you don’t have money to do so. A traditional indemnity plan through an insurance company doesn’t require the company to have an amount set aside.

Fee-for-service plans generally allow employees to see any dentist they want (rather than choosing from a set network of dentists). If your employees are scattered over a large area, or, for instance, you have telecommuters who live quite a distance from the office, these plans are ideal as every employee will be able to find a dentist close to home.

Things You Need to Consider

Before choosing a fee-for-service plan, consider the following questions:

  • Are the insurance company’s rates for reimbursement enough to reflect actual charges for dental work in your region?
  • Who will manage the plan? Will someone in the office manage it, or should you hire a third party?
  • If you decide to handle the plan internally, will you be able to ensure that you’re following all legal requirements?
  • Does this type of plan appeal to your employees?

Managed Care Plans

With managed care plans, your company contracts with an insurance company who, in turn, has contracted with a group of dentists. Dentists who are part of the plan must accept the fee schedule set out by the insurance company. There are two main types of managed care plans: a preferred provider organization (PPO) plan and a dental health maintenance organization (DHMO) plan.

Both types of managed care plans use a network of dentists who have agreed to a reduced rate. A PPO is usually more expensive than a DHMO, but the plan is generally broader in scope, offers a wider network of dentists and will also offer some reimbursement for non-network care. DHMO plans tend to cost less than PPO plans, but offer a more limited network of dentists and no reimbursement for non-network care.

Which Businesses Do These Work For?

If you live in an area with a large number of dentists who have contracted with a specific plan, this can be ideal. Employees may favor these plans as they can calculate their out-of-pocket expenses in advance and plan their dental work accordingly. If your employees are geographically spread out and there aren’t network dentists in everyone’s locations, a managed care plan may not be the best option as the cost of seeing a non-network dentist can be considerably higher.

Things You Need to Consider

Before choosing a managed care plan, answer the following questions:

  • Are there enough network dentists and specialists available in your area(s)?
  • What happens in an emergency if your employee is out of town? Are there provisions for that type of coverage?
  • Do the covered services meet your employees’ needs? Consider treatments such as orthodontics, crowns and root canals—all expensive procedures that can be critical to your employees’ dental health.

Other Plans

Of course, there are other plans–for example, a prepaid plan—where you contract with specific dentists who receive a monthly fee for each patient. With a prepaid plan, if an employee needs to see a dentist for any covered procedure, they must see the contracted dentist.

Discount plans are another option. Discount plans are not strictly a type of insurance plan, but they do provide a discounted rate on dental work with a set group of dentists. One benefit of a discount plan is that, as long as the employee sees one of the dentists in the group, she will know the rates in advance.

Dental insurance is a key benefit that is essential to the well-being of your workforce. By choosing a dental plan that meets the needs of your employees, you’ll be playing a big part in both their oral health and their overall wellness.

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