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Dental Benefits Evolve in an Exchange-Driven World
 

By Stephen Miller, CEBS  10/2/2013

NEW ORLEANS—“The dental benefits industry is moving forward as the Affordable Care Act unfolds,” with a growing number of employers shifting toward self-funded plans and defined contribution approaches, “just as they’re doing with their health plans,” said Chuck Misasi, senior vice president at dental plan provider Careington International Corp., at the 2013 EBN Benefits Forum and Expo, held Sept. 22-24, 2013.

Misasi noted that dental care is the second-most-requested employee benefit, after health care, and it, too, is being transformed. The following are among the major shifts:

  • Employer funding of dental benefits is decreasing, and consumers are bearing more of the cost.

  • As dental becomes a voluntary, employee-paid benefit, workers’ dollars to purchase voluntary benefits are being stretched.

  • Dental premiums have shown signs of growth after stalling during the recession.

  • The expansion of both private health care exchanges and private dental-plan-specific exchanges will encourage defined contribution strategies, by which organizations give employees a set dollar amount to use toward the purchase of an exchange-based plan.

  • Under the ACA, pediatric dental and vision care are included as essential health benefits (EHBs) for plans in the small group market (generally, up to 50 employees). Pediatric dental care can be provided within the health plan or as part of a stand-alone comprehensive dental plan (see text box at the end of this article).

“Employer dental contributions will continue to erode as voluntary dental becomes the norm,” Misasi said. “Private exchanges will be expected to provide a better buying experience, with more plan options, price transparency and comparison information.”

Among the options increasing in popularity, he said, are dental discount plans that use in-network-only providers, with lower out-of-pocket costs and no deductibles. These plans, which are either voluntary or employer-paid, may be more affordable for low- to middle-income employees.

Other options include indemnity plans with preferred-provider organizations (PPOs), and approaches that use health reimbursement arrangements (HRAs) to fund defined contribution dental plans. “A limited-purpose HRA can be used for dental and vision care,” Misasi noted. “Group plans can be purchased on an exchange with pretax dollars.”

Different options are increasingly available on dental exchanges such as mydentalchoices.com, dentalplans.com, 1Dental.com, TrueDentalDiscounts.com and DentalInsurance.com. Dental plans can also be packaged with medical plans that are available on the growing number of private health insurance exchanges run by benefits consultancies, brokers and insurance providers.

Another advantage of private exchanges is “they allow employees to search for a plan with a network that includes their dentist—if that’s their preference—or, conversely, to search for a new dentist who participates in a favored plan or who is located nearby.”

As new dental-plan designs and delivery systems emerge, “a low-cost, high-value, transparent and Amazon-like shopping experience will be in demand for dental and other benefits,” Misasi predicted.

 

Projected Dental Cost Trends: 2013 and 2014

 

2013

2014

Schedule of allowance plans (list of covered services with fixed-dollar amounts)

4.0%

4.0%

Fee-for-services/Indemnity plans

4.0%

3.8%

Dental provider organizations (DPOs)

3.5%

3.4%

Dental maintenance organizations (DMOs)

4.1%

4.5%

Source: Segal Consulting, 2014 Segal Health Plan Cost Trend Survey

  -----

Pediatric Oral Care: Now an ‘Essential Health Benefit’

 

The Affordable Care Act requires nongrandfathered, fully insured small group plans to provide 10 essential health benefits (EHBs), including pediatric oral health and vision services.

Small businesses that select medical coverage that includes the pediatric dental EHB can keep their current dental plan or opt for stand-alone dental coverage that excludes pediatric preventive care, explained Jolynne Williamson, assistant vice president of group dental products at Guardian, a dental benefits provider.

“There are a number of advantages to purchasing a stand-alone dental plan, rather than relying solely on the pediatric benefit that comes within a medical plan,” Williamson said. For instance:

 

  • The oral health EHB applies to members up to age 19, but not to adults, so children alone may be covered for dental. “This means adults may need to purchase separate dental insurance that could require them to go to a different dentist than their children,” Williamson said.

  • When the pediatric dental benefit is part of a medical plan, members may end up paying more out-of-pocket costs for dental services than with a stand-alone plan, because they may have to meet their medical deductible or medical out-of-pocket maximum before receiving full dental benefits.

  • Medical insurers are not experts in dental care and are unlikely to provide the size of network, level of coverage and streamlined processes for handling claims that dental insurers do.

  • Keeping dental separate lessens the impact on high-value health plans of the Cadillac tax, which will be imposed on medical plans beginning in 2018. “Stand-alone dental carriers are exempt from the tax,” Williamson said.

The ACA defines a small employer as an employer having at least one but no more than 100 employees. However, it provides states the option of defining small employers as having at least one but not more than 50 employees in plan years beginning before Jan. 1, 2016.

Self-insured small group plans, large group plans, and grandfathered plans are not required to offer essential health benefits.

Stephen Miller, CEBS, is an online editor/manager for SHRM.

Related External Resource:

Affordable Care Act, Dental Benefits Examined, American Dental Association

Related SHRM Articles:

Costs of Routine Dental Services Vary Widely, Analysis Finds, SHRM Online Benefits, October 2011

Tips for Evaluating Dental Provider Networks, SHRM Online Benefits, March 2011

Dental Benefits Undervalued Without Effective Communication, SHRM Online Benefits, August 2009

Put New Teeth in Dental Coverage, Report Recommends, HR News, March 2008

Related SHRM Resource:

Request for Proposal (RFP) - Managed Dental Plan

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SHRM Online Benefits page

SHRM Online Health Care Reform Resource Page

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