As every employer already knows the most requested benefit after medical insurance is comprehensive dental insurance. The reason for this should be obvious to everyone; dental is the one insurance product that actually gets used on a regular basis. If employees do not currently get their teeth cleaned twice annually they want to and would if they had a dental plan that paid for it. Yet despite the recognition that dental insurance is the most requested of all benefits only 30% of employees working for companies with fewer than 99 employees have access according to the Bureau of Labor Statistics most recent (2009) published study. But what is really sad is that employers are not getting their money’s worth for the plans that they have implemented.
The Current Approach to Dental Insurance
The typical employer shops his dental plan at the same time as he shops his group medical insurance plan. As a general rule the employer engages the services of one or more insurance agents to shop all of his benefits simultaneously, which include medical, dental, vision and other ancillary insurance products. At no time does anyone ask the very important question: what are you trying to accomplish by offering any of these benefits?
The answer to that last question (if asked at all) will generally include a desire to attract and retain high quality employees, to improve employee morale and productivity and to offset the employee’s desire for increased wages. Unfortunately what tends to happen is the agent submits the employer’s census to a number of carriers, creates a spreadsheet of like plans and recommends the lowest cost option. Sadly the only plan design that is ever presented is the following:
100% coverage for preventative and diagnostic services with no deductible
80% for basic services such as fillings and simple extractions
50% for major services such as bridges and crowns
There is a $50 annual deductible for basic and major services
The agent may have added orthodontia for children
Additional but meaningless options are moving periodontics and endodontics from major services to basic services which also increases cost.
You are likely asking yourself what is wrong with this approach and the answer is amazingly simple: it has nothing to do with you corporate needs. In fact this approach is actually counter-intuitive. With this approach you get a plan that is costly and that will increase in cost significantly over time. And when the premium is higher than you want to pay the typical agent’s solution is to have you pay 50% of the employee premium. The end result is participation rates considerably lower than 70% of eligible employees, not because non-participating employees do not want dental insurance but because they have limited dollars.
Here are a few suggestions for improving the outcome of investing in a dental plan for your group:
1: Consider replacing the annual deductible with a single, lifetime deductible. This lowers premiums and creates a plan that employees will not want to move away from.
2: Consider eliminating the annual deductible and replacing it with a per-visit copayment of $10 to $20. Employees are used to copayments from their medical coverage and like the concept more than the annual deductible. This one change can lower premiums 10% or more
3: Consider a graded benefit plan where new hires are subject to lower benefits in the first year with benefits increasing over three years. This approach eliminated waiting periods and lowers premiums.
4: Instead of contributing 50% of the premium have the agent create a low priced option such as one that covers preventative and diagnostic procedures only. In North Carolina this option will cost an employer less than $9 per employee per month. This will be covered in a future article.
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