How to Set Up A Dental Plan: Dental Plan Alternatives
Even during lean economic times, it's still possible to set up a dental plan for your employees and keep the company afloat. One hundred percent employee-funded plans are looking very enticing these days, says Davidson. The employer in this kind of plan isn't paying a premium, but is incurring some administrative expense to help communicate plan details, do a payroll deduction and trying to facilitate the participation of the workforce in the plan.
"One of the things that makes it attractive to employees …is that the premiums are taken directly from payroll deduction to the dental provider and the costs are still spread over a group rather than one individual. That reduces the cost overall as opposed to the employee going out to the open market and trying to buy insurance individually," explains Davidson.
Tawana Roman, account executive at Bollinger Insurance in Short Hills, New Jersey, says it's hard not to notice how the economy is taking its toll on plans to offer dental coverage. Clients who were initially interested in fully insured plans have put the idea on the back burner and are instead steering employees toward a dental discount plan, she says. A discount plan is NOT an insurance plan. It offers a discount or reduction off of rates for standard services.
"At least they are getting some money off of the services without having to pay the full amount," says Roman.
Typical discount plans usually offer a 100/80/50 discount off of services that is negotiated by the provider and the dentist. For instance, routine cleanings might be covered 100 percent, while fillings are covered at 80 percent and more extensive work like bridges, crowns or extraction could be covered at 50 percent up to a typical cap of $2,000 maximum yearly benefit. These are fully paid for by the employee.
Health Reimbursement Arrangements (HRAs) or self-funded employer plans are a less popular option than the aforementioned. Here employers pay for dental coverage with money set aside specifically for this purpose. The plan's strength lies in its straightforwardness, as employees are reimbursed according to a simple formula that does away with the complexity of deductibles and the like. An HRA allows the employer to define how and when reimbursement applies, often at a flat rate based on a given procedure. Usually this is an opportunity for a company to save money.
According to Lee, "What the company is saying is 'We're going to pay for everything, but we're betting that the usage will be so low that it will be less than the cost of us paying premiums.'" Sounds like a win-win, right? Lee says be sure you want to place that bet. "The risk with a self-funded plan is that if you have someone who has dentures, needs braces, or some major procedure that comes at a very high price, you could very easily find yourself in the neighborhood of spending $10,000 to $15,000 per year for 10 or more employees."
In the end, knowing what your budget allows for and how much your employees are willing to pay will help you navigate the ever changing marketplace for small business dental plans.
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Resources
Surgeon General's Report on Oral Health will give you a greater understanding of the need for better oral health care and its relationship to a healthier, more productive workforce.
The United States Department of Labor, Multi-Group Insurance Plans defines the rules and regulations behind joining a "health care club."
VendorSeek: Find the top 10 reasons for considering a dental health plan.
Society for Human Resources Management provides useful articles and resources for human resources professionals.
Delta Dental Associations report on the state of dental health benefit market in the U.S.
