What Employers Should Know About Dental Insurance

Written by: AEIS

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 dental benefits are equally important, but they’re usually not wrapped up in your standard health insurance offering. 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 make a decision, there are some key basics employers should be aware of when considering which dental plan is right for their team. Read on to learn more from the employee benefits experts at AEIS. 

What is Covered by Dental Insurance? 

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 health 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 the amount of money they will pay toward an employee’s dental care each year. 

How Does Dental Insurance Work for Employers? 

The way your company’s dental plan will work depends in large part on the type of plan you select. The two most common types of plans are dental PPOs and HMOs. 

Dental PPOs versus Dental HMOs:

Dental PPOs, or Dental Preferred Provider Organization plans, are plans with 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 Dental PPO or a Dental HMO is best for your organization? One factor to consider is average premium cost. The average monthly premiums for DHMO plans are $22.75, while the average monthly premiums for DPPOs are much higher, at $62.75. According to Cigna, DPPOs differ on several key factors, including coinsurance, copays, annual maximums, waiting periods, among other things. DHMOs charge coinsurance amounts as a percent of a flat rate for services, while DPPOs charge coinsurance amounts as a percent of the contracted rate per dentist. DHMOs typically don’t have annual maximums, while DPPOs almost always do. DHMOs always assess copayments, while DPPOs may or may not. Finally, with DHMOs, there’s usually no waiting period, but there can be with a DPPO, especially for groups with less than 5 or 10 employees.

How Carriers Adjudicate Claims that are Out of Network:

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:

Dental Plan 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.

If an employee sees an in-network provider, the MAC structure works like this: Hypothetically, let’s say the set MAC fee determined by your insurer for a dental bridge is $50, and the insurer has agreed to cover 80% of the MAC fee for tooth bridges. In-network providers are “in-network” because they have agreed to accept your insurer’s MAC fee.

If the employee sees an out-of-network provider, however, the scenario is a bit different. In this instance, the insurer still covers a set percentage of the MAC fee, but the insured is responsible for making up the full outstanding balance, known as a 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. 

Dental Plan 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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Dental Insurance 101 For Employers – Frequently Asked Questions: 

1. How much do Employers Pay for Dental Insurance? 

Who pays for dental insurance: is it the employer, or the employee? The answer is: whatever you decide is best for your company! KFF found that in 2021, the average health insurance cost for employers was $16,253 annually, or 73% of the premium, to cover a family and $6,440, or 83% of the premium for an individual. These premiums for families and individuals have increased 22% over the last five years and 47% during the previous 10 years.

If you choose a fully insured dental plan, dental insurance monthly premiums can be paid either 1) in full by the employer, 2) in full by the employee, or 3) by the employer in part, and through employee contributions in part. Of course, employees are generally going to be the ones responsible for paying deductibles copayment associated with the plan you choose. 

2. I have a Small Business, how can I Offer Dental Insurance? 

No matter how large or small your organization is, you can find a dental plan that works great for your employees. While almost all large employers with 200 or more employees offer dental insurance, more than half of small firms offer dental insurance as well, and the percentage is climbing every year.

3. Are There any Dental Benefits I can Offer as an Alternative 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. 

4. Is my Organization Legally Required to Offer Dental Insurance? 

No federal or state laws require businesses of any size to offer dental insurance to their employees.

Why Should Employers Offer Dental Insurance? 

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 Center for Disease Control and Prevention 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. 

Partnering with an Experienced Health Broker 

If you’re considering offering dental coverage to your employees, you’ve come to the right place. Advanced Estate & Insurance Services, Inc. (AEIS) brings more than 35 years of experience in the industry to your advantage. 

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.