All purchase decisions have a cost versus value analysis. Sometimes it’s an easy call like replacing a printer that breaks every week. However, considering a purchase with more unknowns, such as dental insurance, can make settling on the right choice more complicated.
While reviewing dental insurance options for your business, it’s important to look at cost through the lens of both employer and employee. You need to keep your employer dental insurance costs in check. But you also want to get the most value for your employees.
Question a rate that looks too low and learn how it will impact your employees. If a plan is structured to keep employer dental insurance costs down, it often means reduced coverage for your employees – which can lead to more out-of-pocket costs for them. And, as you know, higher employee costs may lead to potential dissatisfaction or employee complaints.
Most of the time, you’ll likely have a broker to help with a dental plan purchase decision, but it never hurts to have a little more knowledge. Asking the right questions may make a difference. After all, the plan is for you and the employees you’re representing.
How does the type of dental insurance affect my costs?
When it comes to the average cost of dental insurance for employers, the answer isn’t simple. What you can expect to pay depends on your type of dental plan, coverage specifications and more. The reality is that plans can vary widely. This is why there are many elements to consider when choosing the right dental insurance plan, so you can support both the needs of your business and employees.
Who pays the premiums: Voluntary and contributory dental insurance plans
The most common type of dental insurance plan is a contributory plan where the employer pays (or contributes to) the premium. Some employers pay the entire premium for their employees. In other cases, both the employer and employee contribute to a portion of a premium. With this model, an employer pays at least 50% of the employee-only premium rate.
These dental insurance premiums can add up, especially if your business is covering all or most of the bill. An opportunity to reduce employer dental insurance costs is shifting more of the premium cost to employees.
With a voluntary dental plan, employees pay most or all of the premium for a plan offered by your business. It can be a win-win for employers and employees. Your business saves costs and employees still get the option of high-quality dental coverage with group rates. Plus, they can pay their premiums using pre-tax payroll deductions.
How the plan is financed: Self-funded (or self-insured) and fully insured dental insurance plans
Depending on the size of your company and the health of your employees, there’s a chance that a self-funded dental plan could save your company money. If you’re not sure of the difference between fully insured and self-funded dental insurance, here’s what you need to know.
A fully insured dental plan is one of the more traditional ways of offering employees dental coverage. You, as the employer, choose a plan from an insurance carrier. The insurance carrier will offer a set of rates based on the plan selected and the size of your organization. The insurance company assumes all of the financial risk. If your organization has high claim costs, the financial burden falls on the insurance carrier.
With self-funded dental plans, an employer puts money aside for employee dental claims and takes on all financial risk for the cost of the claims during the year. For these types of plans, a dental insurance carrier is used to administer the plan and handle paperwork. For its services, the dental insurance carrier charges an Administrative Services Only (ASO) fee. This fee is typically charged on a per employee per month basis or PEPM.
Self-insured plans could cost you less than fully insured plans because they are not subject to certain taxes and fees that insured plans are required to charge. And if costs are lower than projected, the employer keeps the savings. However, you’re also the one who would accept all financial risks if claims costs exceeded the projections. It’s important to note that self-insured dental plans are only available for large employers.
Dental insurance costs for small businesses
For smaller businesses with fewer than 50 employees, many employers opt to explore fully insured small employer dental plans. As mentioned, this type of plan puts responsibility for all claims costs on your dental insurance carrier. This option can offer you peace of mind, knowing your carrier will assume most or all financial risk. Also, with a fully insured plan, you, as the employer, will know in advance exactly what you’re expected to pay in premiums. However, this rate can increase from year to year, so it’s important to stay up to date with any plan changes.
How do included and excluded services affect average dental rates?
This is where you will find the biggest difference between dental plans. It can also be the most challenging when trying to compare your options – both in terms of plan value and dental rates.
Dental plans have an Annual Maximum, which is the most the dental plan will pay toward your employees’ dental care each year. There may be a deductible as well. While the Annual Maximum and deductible may be similar across plans, it doesn’t necessarily mean that the plans offer the same value. That’s because there can be significant differences in the amount of coverage a plan provides for dental services.
Coverage for dental services is split into the broad categories of Preventive/Diagnostic, Basic Care and Major Care. Some plans also cover Orthodontics as a fourth category.
- Preventive and Diagnostic Care: Includes routine checkups and cleaning. This type of care is usually covered at 100%.
- Basic Care: May include fillings, root canals, gum care and oral surgery. Plans often cover basic care at 80%.
- Major Care: May include crowns, bridges, dentures and implants. It’s typical for plans to cover major care at 50%.
- Orthodontic Care: When offered, most plans usually include a life-time maximum. But the dollar amount can vary by dental plan.
Did you notice the “may include” after basic care and major care? One of the biggest drivers of premium cost is the services covered under each of the categories.
For example, some plans will cover root canals under Basic Care while others cover it under Major Care. Whether a root canal, which can cost more than $1,000, is covered under Basic Care at 80% or under Major Care at 50% will have a significant impact on your employee’s out of pocket cost. A lower coverage level will result in a lower premium with the tradeoff being higher costs for the employee.
In addition, there are often limitations on services like preventive care, lab work and X-rays, common procedures, surgical and nonsurgical procedures, denture care and more. We recommend asking to see a detailed plan summary, which should include a high-level overview of key limitations and exclusions, including visits allowed per year or age limits.
It’s important to know what services your plan covers and how they affect your dental rates. When it comes to clarifying questions, the more thorough you are, the better.
How will my dental insurance plan affect the total cost of care?
Total cost of care is the overall health expense for you and your employees. Dental insurance matters because it can impact employee and employer cost for dental and overall care.
Improved overall health can help reduce total cost of care
Here’s how dental health affects overall health. Your mouth is part of your body, which means problems with your mouth can cause problems with the rest of your body. Poor oral health is linked to other medical conditions such as heart disease, pregnancy complications and pneumonia. Better dental health is tied to better overall health – which can translate to lower health care costs.
HealthPartners created MouthWise Matters to support this concept. HealthPartners MouthWise Matters is an oral health education platform that also includes enhanced benefits.
For example, all our dental products automatically provide enhanced dental benefits during pregnancy and for people with a higher risk of gum disease because of diabetes. We do this because gum disease harms blood sugar levels in people living with diabetes, which can lead to increased medical costs. For pregnant women, gum disease may harm the health of the mother and baby, resulting in higher medical treatment costs.
Having benefits that support overall health is an approach that can reduce medical costs. By helping to control blood sugar, for example, we can help reduce patient visits and other potential medical treatment costs.
Preventive dental appointments can help avoid expensive dental care
The basic approach to keeping costs down is to focus on regular preventive dental care. It starts with employees following a daily oral health routine of brushing and flossing. This supports overall health and reduces the chances for cavity-causing plaque to form.
Seeing a dentist regularly is also critical. The goal is to prevent problems from happening in the first place, and to catch symptoms of cavities and other issues as early as possible. Plus, dentists are the first line of defense in spotting other potentially harmful diseases, such as oral cancer or diabetes. That’s why the cost of preventive dental care is usually 100% covered with most dental insurance.
Preventive care is best when it starts early. Getting kids on the right path to oral health sets the stage for a lifetime of overall health.
The HealthPartners Little Partners℠ program is a benefit that’s available for many HealthPartners dental plan members. It provides 100% coverage to kids 12 and younger at in-network dentists. HealthPartners also covers dental sealants for all ages, not just kids. Dental sealants are a thin coating brushed on teeth to help keep them healthy and avoid decay.
A strong dental discount network provides savings and can increase utilization
Dental discounts are the fees that the insurance companies negotiate with providers to reduce the cost of dental services. For example, a dentist will charge less to fill a cavity for patients that have coverage through a specific dental insurer. What the dentist hopes to get in return for being in-network and offering a discounted fee is more patients.
However, network savings isn’t the complete story. The other piece of discounts is utilization. High utilization means more dental procedures and more costs. So, higher discounts don’t always result in lower costs. There’s potential for high dental discounts to increase utilization – but this is still positive since dental care is tied to improved overall health and lower total cost of care.
What can I expect for future cost increases?
In general, an employer’s premiums will adjust each new plan year based on claims costs and projections. Dental plans offered to small employers are usually a part of a much larger pool, or groups joined together (pooled) to reduce risk for the insurer and keep small business dental insurance costs moderate for all employers. At renewal the insurance carrier usually gives a similar small trend increase to all employers in the pool. Being in a pool gives you rate stability and predictability.
Large employers usually have their own custom plan design and their renewals are based on their own claims history and projections of future claims costs. If you want to make changes to your plan design, whether to target a premium goal or adjust your dental benefits package for your employees, your insurance carrier can work with you to tailor your plan to fit your needs.
With self-insured plans, your ASO fee may have a small trend increase to cover the increasing costs required to manage your plan. By far, the biggest driver of your dental plan costs is your dental claims. Your renewal will project your next year’s claims costs. Your carrier can work with you to understand the projections and discuss any adjustments you may want to consider.
Ask questions to ensure you’re protected from overly optimistic projections by the carrier, since you’ll be paying all claims costs. This is particularly important if you already have a dental plan and a new carrier is showing you dramatic savings. Ask questions to understand where the savings are coming from. Is it from deeper provider discounts, reduced benefits for employees or some other source?
Buying dental insurance that fits your business
Want more insight on choosing an affordable plan that keeps your employees happy and healthy? These questions are a great starting point, but our how-to guide will give you the knowledge you need to pick the right dental plan for your business.