Selling Voluntary Dental Shouldnt Be Like Pulling Teeth
Dental insurance consistently ranks as the most requested benefit by employees after medical coverage. However, many employers can no longer afford to absorb the cost of adding the program or continuing their current dental plan due to constantly rising medical premiums.
Voluntary dental programs continue to be a great solution. A properly designed plan will allow employees and their families the option to purchase dental coverage through the convenience of payroll deduction and still have the quality and cost effectiveness of a group plan. This also can be done by taking advantage of a Section 125 plan, which offers additional tax advantages to both the employee and the employer.
There are many different dental programs from which to choose:
Managed care dental programs (dental health maintenance organizations),
Preferred provider organizations,
Freedom of choice programs, and
Direct reimbursement programs.
Voluntary plans will try to reduce costs by adding waiting periods, removing orthodontia as an option and moving periodontics/endodontics from a basic (80%) reimbursement to major (50%) reimbursement.
Understanding the current environment of the employer you are working with will help determine what type of plan is needed as well as the specific benefit design and cost options. Things to consider when implementing a dental program:
Employer costs: Although no employer cost is associated with a true voluntary plan except for minimal administration costs, an employer can decide to contribute to the cost of the program if it chooses. This will increase employee participation and assure the goodwill benefits of offering a plan.
Long-term strategy: While it is tempting to offer a bare-bones plan that makes the initial offering attractive, it is more important to communicate exactly what the plan will and will not cover. Dental utilization is typically high, and the last thing an employer wants is employees complaining about a plan that does not cover certain procedures at claim time. It is also important to have the plan priced correctly the first time to avoid having to go back at renewal to try and increase rates substantially.
Access: Especially when recommending an employee-paid dental program, remember that employees typically want very much to be able to go to their own dentist.
Quality of carrier: It is important to check references of any carrier you may be recommending. Typically a call to several local dentists will yield the feedback you need, as well as checking employer references.
Participation: Most voluntary dental plans require that a certain percentage of eligible employees enroll. This may be as low as 20%. A proper enrollment strategy that is well communicated and educates rather than just sells employees will yield much higher enrollment than the minimum standards.
Some plans require higher participation requirements, such as 50%. While these plans may offer substantial better benefits, be aware of the risk of not meeting the plan requirements and potentially jeopardizing the program altogether.
Proper plan design and product: A properly designed plan takes into consideration many factors about the employees of a group and the environment they are currently in. Whether focusing the design of the program around keeping cost to a minimum or designing the strongest benefit plan, it is important to communicate upfront to employees all the benefits of a plan as well as its limitations.
Consider whether or not the group is a virgin risk (never had dental coverage) or a replacement risk. A group that has not had prior dental coverage will typically have a very high utilization rate in the first year. A properly designed program will take this into account to avoid an unmanageable rate increase at renewal time.
Claims payments: It is important to determine how an insurance company reimburses a dental provider. A well-designed indemnity plan should reimburse the provider based on reasonable and customary charges and not on a fee schedule. They are based on the location of where the services are provided and should be based on a percentile (90th preferably). Be sure to ask the insurance company how often it updates its R&C charges and whether it uses the AAHP-HIAA studies. Most quality carriers will update their R&C charges every 6 months. In addition, a quality carrier will auto-adjudicate a high percentage of submitted claims, which will assure a quick turnaround time for reimbursement to providers or employees.
Rate guarantee: Group insurance typically renews every 12 months, although some plans will offer a 2-year rate guarantee as an option. Rate stability is important to maintaining the longevity of a dental program.
Properly designed dental programs need to provide a quality level of benefits that are properly communicated to employees upfront to keep all employees satisfied and allow the employer to gain the goodwill of offering a group dental plan. With dental insurance continuing to be one of the most requested benefit plans, understanding the options available to you can assist you in implementing a plan that will reward all for years to come.
Donald R. Tardif is principal of Meridian Benefits Companies, a Charlotte, N.C., intermediary, distributor and administrator of ancillary employee benefits. You can reach him by e-mail at [email protected]
Reproduced from National Underwriter Edition, November 24, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.