1. Why is self-funding a dental plan a feasible option?
2. How will my company determine how much money to put into our “dental savings account” for a given year?
3. What are some common plan designs that Virginia employers are using for their Dental Direct Reimbursement and Assignment plans?
4.  If our company has 25 employees and we design a plan with $1,000 as the annual maximum, will our company’s dental expenses be $25,000 for the year?
5. As an individual, can I enroll in a Dental Direct Reimbursement or Assignment Plan?
6. What size companies can utilize a Dental Direct plan?
7. Since this dental benefit is different from what my employees are used to, will education about the new plan be difficult? 
8. Compared to traditional insured dental plans, how will my company see savings with a Dental Direct Reimbursement or Assignment plan?
9. What about the discounts that large insurers have negotiated with providers (Usual, Customary and Reasonable)? Without that, won’t my costs increase?
10.  I think that Dental Direct Reimbursement and Assignment could be a good option for my company and I am interested to find out more specifics on this type of plan.  What should I do now?

 

 

Q. Why is self-funding a dental plan a feasible option?

A. As opposed to medical costs which can be catastrophic and unpredictable, dental expenditures are typically non-catastrophic and predictable. Dental costs tend to be relatively low compared to medical costs, with the average dental claim around $250. These factors make self-funding a very viable option for the dental benefit. Additionally, stop-loss insurance may be purchased to mitigate some of the already low risk associated with self-funding. 

  

Q. How will my company determine how much money to put into our “dental savings account” for a given year?

 A. Benefits Administration, Inc. (the endorsed TPA of the Virginia Dental Association) can provide you with an actuarially based cost-estimate for your plan by collecting some simple information about your company and what type of plan you would like to implement. This cost-estimate can then be used to determine the level of employer and/or employee contributions. Please feel free to contact Mr. C.P. Coyner at Benefits Administration, Inc. at 888-379-2218 to discuss their services.

  

Q: What are some common plan designs that Virginia employers are using for their Dental Direct Reimbursement and Assignment plans?

A:  

   

Plan 1	Plan 2	Plan 3
100% of the first $180 in dental expenses	100% of the first $150	100% of the first $200
$50 member responsibility (deductible)	$0 member responsibility	$25 member responsibility
80% of the next $150	50% of the next $1700	80% of the next $100
50% of the next $1400		50% of the next $440
$1000 annual maximum benefit per member	$1000 annual maximum	$500 annual maximum

 

Q: If our company has 25 employees and we design a plan with $1,000 as the annual maximum, will our company’s dental expenses be $25,000 for the year?

  

A: No, having all employees reach their annual maximum allowance would be a statistical anomaly. Typically, only about 65% of employees with a dental benefit visit the dentist during the plan year.   Additionally, average annual dental claims are around $250 per plan participant. Only rarely will an employee hit their annual maximum. It is also important to remember that with Dental Direct Reimbursement and Assignment, any funds you put into your plan are retained by you, the employer. If you fund more in a plan year than your employees use, that money can be used to fund the following year. Unlike premium payments that are retained by an insurance company, as a self-funded benefit your company retains all excess funds in your “dental savings account.”

 

Q. Can individuals enroll in a Dental Direct Reimbursement or Assignment Plan?

A. No, Dental Direct Reimbursement and Assignment plans are only for groups.

 

Q. What size companies can utilize a Dental Direct Reimbursement or Assignment plan?

A. Employers of all sizes can use a Dental Direct DR or DA plan. Cost-estimates are most accurate, however, for groups over 20.  Employer groups with less than 10 employees and those with over 10,000 have all successfully used Dental Direct DR and DA plans.

 

Q. Since this dental benefit is different from what my employees are used to, will education about the new plan be difficult? 

A. No, Dental Direct Reimbursement and Assignment plans have simple designs and are easily understood by employers and employees alike. Without all of the exclusions and uncertainty of what will be covered, DR and DA provide simple reimbursement based on treatment dollars and not the type of procedure. There are also no networks, waiting periods and treatment pre-authorizations that can complicate traditional insured plans. 

 

Q. Compared to traditional insured dental plans, how will my company see savings with a Dental Direct Reimbursement or Assignment plan?

A. While each situation is unique, there are several factors that could lead to a cost savings with a Dental Direct Reimbursement and Assignment plan. First, with these plans, benefits are only paid out of the plan when an eligible employee or dependent receives dental care. Only about 65% of people with dental insurance visit the dentist in a given year, meaning that about 35% of premium dollars are spent for employees who will not utilize the benefit.  With Direct Reimbursement and Assignment, any over-funding of the account in a given year may be retained in the account for use in subsequent years. 

 

Also, administration costs of DR and DA plans are typically lower than with managed care. Both self-administered and TPA plans generally save significantly on administration. In many states, there is also a cost savings, as DR and DA plans do not have to pay the state insurance tax that is typically included with traditional insured plans.

 

Q. What about the discounts that large insurers have negotiated with providers (Usual, Customary and Reasonable)? Without that, won’t my costs increase?

A. Not necessarily. The average discount negotiated by a managed care network usually is only about 3-5%, because 80-90% of all dentists in managed care networks already receive full fee for their services. The lower administration costs associated with DR and DA usually pay for the absence of network discounts and also produce an overall reduction in cost of the dental benefit. Also, some providers are willing to offer a discount to patients who pay at the time of service which can mean additional savings for your Dental Direct plan!

 

Q. I think that Dental Direct could be a good option for my company and I am interested to find out more specifics on this type of plan.  What should I do now?

A. Contact Benefits Administration at 888-379-2218, via email at ccoyner@benefitsadmin.net or complete our online Cost Estimate form and we will contact you promptly to discuss Dental Direct Reimbursement and Assignment.