Navigating Benefits

Understanding Dental Insurance: The Basics

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Posted by December 8, 2016

Dental insurance, along with medical insurance, remains crucial for keeping your employees healthy. This essential benefit can help you cut down on lost productivity and sick days due to dental problems, and the costs involved can be less expensive and often times, more predictable than health insurance.

However, understanding dental insurance can be tricky. There can be significant variation between plans and you want to make sure that the one you choose is the right fit for your workforce. To help, we’re covering some of the most important factors to help you understand how company dental plans work.

Types Of Plans

There are a few different types of dental insurance plans:

Fee-for-service plans typically offer the most coverage but are the most expensive. To cover the cost, your company will need to pay more for these plans, pass the higher expenses along to your employees, or some combination of both. In exchange, employees are free to see whichever dentist they want, and dentists set their own fees for treatments.

Managed-care plans cost less because they have more restrictions. Employees may be limited to a network of dentists, or dentists may have to agree to set payment terms from the insurance company and, as a result, some dentists will not want to participate.

Another low-cost option is a dental discount plan. These aren’t true insurance plans because your employees pay all the costs themselves. However, participating dentists in these plans offer a steep discount compared to their normal costs, 50% or higher, in exchange for your company being part of the plan.

Dental insurance is often a trade-off between cost and flexibility. To get an idea of what your employees want, you could conduct a survey to see how much they value dental care versus other benefits so you can decide how much of your budget to put towards the dental plan.

Dental Network

A dental network is a list of dentists that have been approved to work with an insurance plan because they came to an agreement on fees. These networks are a way to lower costs but could be frustrating for your employees because they restrict which dentists they can see.

Fee-for-service plans do not use a network; however, some managed-care plans do. If a plan is advertised as a PPO (Preferred Provider Organization), it uses a preferred network of dentists. Employees pay less for treatment when seeing in-network dentists but still have the option of receiving care from an out-of-network dentist. This could be a good balance as it gives your employees flexibility. A DHMO (Dental Health Maintenance Organization) is the least expensive type of plan because employees can only see in-network dentists to receive any coverage from your company plan.

Employee Costs

Sharing the cost load with your employees might be the best way to offer an affordable plan. Your plan could have a deductible, which is the amount employees have to pay each year out of their own pockets before their coverage kicks in. You could also set up a cost-sharing agreement, where, for example, your plan might pay 80 percent of all treatment costs and your employees pay the remaining 20 percent.

You could also charge employees a monthly cost for their coverage that automatically comes out of their paycheck. Finally, you can set an annual limit on the amount your plan will pay for treatment every year. Anything above this limit, and your employees will need to pay themselves.

Passing some costs on to your employees might be the only way to manage high dental premiums. However, if you defer too much of the cost on to them, they will not appreciate the plan. You also need to monitor out-of-pocket costs for receiving care, such as deductibles. If they are too high, employees might skip treatment until a small problem becomes much more serious. That’s why any plan should still make preventive care, such as cleanings, as inexpensive as possible—even if there is cost sharing for other services.

Running Your Plan

If you want an easy way to run your dental plan, you can pass the full job to an insurance company. You pay them a monthly insurance premium for your plan and then they take care of paying out the dental benefits for your employees.

If you want to take on a more active role, you can also self-insure. This means that you pay for employee costs out of company resources. This takes more work because you need to designate an administrator to track the plan and pay out the benefits, but this could end up costing less than running everything through an insurance company.

The right fit for your company dental plan depends on the unique needs of your business and employees. Understanding dental insurance is crucial to making smart decisions about your dental plan’s features. Now that you have a solid grounding in the basics of dental insurance, you’ll be better prepared to discuss your needs with your benefits broker and choose the best plan for your business.

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