What Employers Should Know About Dental Insurance

Table of Contents

• What Does Employee Dental Insurance Cover?
• How Does Dental Insurance for Employees Work?
• Employee Dental Insurance FAQs for Employers
• Why Should Employers Offer Dental Insurance?
• Partnering with an Experienced Benefits Broker

As an organization with a stellar team of talented employees, you know it’s important to offer great benefits. Doing so has advantages for your business beyond just recruitment and retention. What not all employers realize, however, is that employee dental insurance is just as important, and it's usually offered separately from your standard health insurance plan. With employees indicating that dental or vision insurance is the third most important benefit in making a job decision, behind only health insurance and a retirement savings plan, dental insurance is a benefit that should be on your human resources department’s radar.

Thinking of offering dental insurance to your employees? You're off to a great start! Before you decide, here are the key basics employers should know about how group dental plans work, what they cost, and how to choose the right one for your team. Read on to learn more from the employee benefits experts at AEIS. 

First things first, it’s important to know that there are many different types of dental plans. With that said, a “typical” dental policy will cover preventive care (generally two preventative visits each year), fillings, crowns, root canals, and oral surgery, such as tooth extractions. Of course, more comprehensive plans can be selected to cover items such as orthodontics, periodontics, and prosthodontics, for example, dentures and bridges. 

A great deal of dental plans available today adhere to what’s known as a “100-80-50” coverage structure.

A 100-80-50 plan is designed to cover: 

• 100% of the cost to the patient for preventive care, including check-ups, diagnostic care, cleanings, and dental exams
• 80% of the cost associated with basic dental procedures, like root canals, removal of teeth, and fillings
• half of the cost to the patient for major dental procedures, including crowns, bridges, implants, and sometimes sealants

With most dental plans, patients are expected to pay for the remaining, uncovered portion of care in the form of a co-payment. While this is the most common structure, your company can certainly select a plan that works differently and covers more or less of certain items, procedures, or categories of care. If your company employs many young parents, for example, it may be in your best interest to select a dental plan that reimburses a portion of orthodontic care for dependents.

The timing of care is an important aspect of what dental insurance will cover for your employees. After you’ve selected a plan, make sure your employees are aware of timing parameters. The average patient will visit the dentist twice annually for checkups and cleanings, and again for the treatment of any identified issues, such as fillings. 

Dental policies are designed around this general structure, and typically support only the number of visits they predict to be necessary. For example, it’s very common for dental policies to fund 100% of a semiannual visit, but no more than just two. It’s also normal for policies to only cover services such as X-rays, crowns and bridges, and fillings to treat the same tooth once during a specified number of years (usually 1-3). No matter what type of care is needed, most dental policies have annual maximums that cap how much the plan will pay toward an employee's dental care each year, often between $1,000 and $2,000. Employers can usually choose a higher maximum for an added premium.

How dental insurance for employees works depends largely on the type of plan you select. The two most common types are dental PPOs (DPPOs) and dental HMOs (DHMOs).

Dental PPOs vs. Dental HMOs

Dental PPOs, or Dental Preferred Provider Organization plans, are plans with a large network of providers. While employees can still see providers out of the plan’s network, if they see an in-network provider, they’ll see lower out of pocket costs and won’t have to submit a claim after receiving care. PPO plans typically have the “100-80-50” coverage structure described.

Dental HMOs, or Dental Health Maintenance Organization plans, are plans that typically trade lower premiums for less patient flexibility. HMOs usually still have a network of dentists under their plan, although their networks tend to be smaller. Employees also must see a provider that’s in-network to ensure any coverage.  While dental HMOs may have very low or nonexistent deductibles and maximums, they do require copayments for the majority of non-preventive procedures.

Choosing Between DPPOs and DHMOs

How can you decide whether a DPPO or a DHMO is best for your organization? One factor to consider is cost. According to the National Association of Dental Plans (NADP), employee-only group coverage averages roughly $17 to $18 per month for a DHMO, compared to roughly $29 to $31 per month for a DPPO. On average, dental premiums cost about one-twentieth as much as medical premiums.

The plans also differ on several key features:

• Cost sharing: DHMOs charge fixed copays for each procedure, while DPPOs charge coinsurance as a percentage of each dentist's contracted rate.
• Deductibles: DHMOs usually have little or no deductible, while most DPPOs have one.
• Annual maximums: DHMOs typically don't have annual maximums, while DPPOs almost always do.
• Waiting periods: DHMOs usually have no waiting period, while DPPOs may, especially for groups with fewer than 5 or 10 employees.
• Network: DHMOs require employees to choose an in-network dentist, while DPPOs offer partial out-of-network coverage.

How Carriers Handle Out-of-Network Claims

An employee can usually see a dentist outside of your plan’s network and receive some coverage. How much coverage is provided will depend on whether the dental plan you’ve selected uses an “MAC” or “UCR” fee structure. Here’s the difference between the two:

MAC Fee Structures

An “MAC,” or a Maximum Allowable Charge fee structure, refers to a fee structure in which a plan sets a maximum amount that they’ll pay for a covered service from a provider.

Here's how a MAC structure works with an in-network provider. Let's say your insurer's MAC fee for a dental bridge is $1,000, and the plan covers 50% of major services. The plan pays $500, and the employee pays the remaining $500. In-network dentists have agreed to accept the MAC fee, so the employee isn't billed more.

If the employee sees an out-of-network provider charging $1,400 for the same bridge, the insurer still pays its share of the MAC fee, $500, but the employee owes the remaining $900. This is known as balance billing. This is because an out-of-network provider never agreed to accept the insurer’s MAC fee, and won’t have to reduce prices for its services. 

UCR Fee Structures

A “UCR,” or a Usual, Customary, and Reasonable fee structure, refers to a fee structure in which a plan has been designed to cover the cost of a predetermined percent of the usual, customary, and reasonable fee charged by a provider. Under a UCR fee structure, employees can visit any dentist they choose. The UCR fee will depend in large part on what providers normally charge for various services throughout a given geographic area. These values are calculated by a third party, using claim data from your business’ area, and are expressed as a percentile. If, for example, a 90th percentile UCR amount is determined for a tooth bridge replacement procedure, this means the UCR value for the bridge procedure will be an amount designed to meet the cost that 90% of providers in your area charge for the procedure. The insurer will then pay this predetermined cost as its maximum payout amount for the service.

For more information on types of dental plans, and guidance on choosing the best dental plan for your organization, contact the employee benefits experts at AEIS. 

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How Much Do Employers Pay for Dental Insurance?

The answer is whatever works best for your company. Employers can pay the full premium, split it with employees, or offer a fully employee-paid voluntary plan.

Dental coverage is far less expensive than medical. According to NADP, employee-only group coverage averages roughly $17 to $18 per month for a DHMO and $29 to $31 per month for a DPPO. Many employers cover all or most of the employee-only premium and ask employees to contribute toward dependent coverage. Note that some carriers require a minimum employer contribution, often 50% of the employee-only premium, to offer an employer-paid plan. Employees are generally responsible for any deductibles, copays, and coinsurance.

How Can a Small Business Offer Dental Insurance? 

No matter how large or small your organization is, you can find a dental plan that works for your employees. Many carriers offer group dental plans for businesses with as few as two employees, though small groups may face waiting periods for major services or minimum participation requirements. A benefits broker can compare small group options across carriers.

What Are Alternatives to Traditional Dental Insurance?

Yes, there are other ways, besides traditional dental insurance, for employers to offer dental coverage to their employees. One of the most common ways to go about providing dental benefits is through a Health Reimbursement Arrangement, or HRAs. This is a particularly attractive option for smaller businesses.

An HRA is a type of health spending account. Funds are deposited into the HRA ahead of time, and those funds can go toward paying for anything that is deemed a “qualified expense.” 

HRAs aren’t always just used for dental, though it’s a great way to provide dental benefits, nonetheless. You can choose to allow HRA funds to be used toward medical, pharmacy, or vision care expenses, as well. This type of blanket advantage can be found in what’s called a Qualified Small Employer HRA, or “QSEHRA.” 

QSEHRAs are available to any company that does not offer a group health plan and has fewer than fifty employees. If you do offer a health plan, you can still use an HRA for dental benefits (or vision, too, for that matter!) using a dental or vision HRA, as opposed to a QSEHRA.

For more information on alternatives to traditional dental insurance, reach out to the employee benefits experts at AEIS. 

Is My Organization Legally Required to Offer Dental Insurance?

No federal or California law requires employers to offer adult dental insurance. However, pediatric dental care is an essential health benefit under the Affordable Care Act, so small-group medical plans in California generally include pediatric dental coverage. If you do offer a group dental plan, it's typically subject to COBRA or Cal-COBRA continuation requirements.

Can Employers Offer Voluntary Dental Insurance? 

Yes. With voluntary dental insurance, employees pay the full premium through payroll deductions, usually pre-tax, while still getting group rates. It's a low-cost way for employers to offer dental benefits, and a growing share of group dental plans are now offered on a voluntary basis.

Are you considering offering dental insurance to your employees? A growing body of research points to the conclusion that you really can’t go wrong doing so. Employees want dental insurance and to be able to weigh the provision of dental insurance in their decision to join or stay at a company. 

In addition, employers who provide dental benefits will save money long-term on health costs for their employees and perform better on indicators associated with employee productivity. Let’s go over some of the data out there on the topic: 

The Power of Dental Benefits in Recruitment and Retention Efforts

According to research uncovered in the NADP 2019 Dental Benefits Report: Enrollment, 79% of Americans had dental benefits, and the majority of these Americans had plans that were sponsored by their employers. This leaves little room for companies to stand out if they’re not offering dental insurance. 

Costs mount for necessary treatment for employees and their children, and when choosing a new job, those costs come to mind. In fact, the 2018 NADP Survey of Employers revealed that 87 percent of employees surveyed believe dental benefits to be either a key differentiator, or absolutely essential. 

Companies who Provide Dental Benefits Have a More Efficient and Productive Workforce

According to research published by the Centers for Disease Control and Prevention (CDC) in 2018, adult employees lose more than 164 million hours of work per year due to dental diseases. Researchers involved in the study indicated that poor oral health is associated with lost hours at work which in turn affect a person’s productivity.

Just like when an individual has a cold, chronic pain, or any other type of ailment, people are not capable of performing at their professional highest standard when they have a dental issue. 

If you’re considering offering dental coverage to your employees, you’ve come to the right place. Advanced Estate & Insurance Services, Inc. (AEIS) has helped employers build benefits packages since 1985.

AEIS will walk with you through your dental insurance and employee benefits questions for a seamless, more manageable benefits selection experience. Choosing the right balance of employee benefits is complex. AEIS makes it simple for you. 

Give AEIS a call at (650) 348-6234, contact AEIS by email at team@aeisadvisors.com, or fill out a contact form.