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Dollar
Based Dental Benefits - A True Consumer-Directed Benefit Program
What
are your clients really looking for in a dental plan? 
Dollar
based dental benefits are an innovative approach to self-funding
employee dental plans that offer these benefits and more – and
brokers across the country are finding these to be valuable assets
to their portfolios.
How can
dollar based dental
benefits generate income for brokers?
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By
charging a one-time fee to an employer for setting up a
self-administered these types of benefit plans.
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By
receiving fees from a third-party administrator (TPA) for
referring clients for TPA services.
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By
using dollar based dental benefits as a “door opener” with
new business clients and prospects.
Over
4,000 employers, large and small, currently use dollar based dental benefits
plans, and thousands more are responding to the ADA’s print,
online and direct-mail advertising efforts.
This information is intended to educate brokers and
consultants like you, so that when clients approach you with
questions about dollar based dental benefits, you’ll have all
the answers they need. You’ll be able to tell them how
these plans can save them money and time. And you’ll know
exactly how they can generate income for you.
Remember—if
you don’t have the answers, you may be surprised to find your
clients seeking other professionals for this information.
So read on with interest.
At the end, you’ll learn how to receive more information
about dollar based dental benefits and selling opportunities for
you.
What
works for your client can work for you.
Dollar
based dental benefits plans can be
either self-administered or managed by a Third Party
Administrator. So how can a broker generate income from
such a plan?
By
selling dollar based dental benefits plans, brokers can add
revenue to their business in the following ways:
Incentive 1:
One-time fee for setting up self-administered dollar based dental benefits
plan
When
an employer chooses to self-administer a dollar based dental benefits
plan, the client pays a fee to the broker who has designed and
implemented the plan for the company.
The broker determines this fee based on market value.
In addition, an on-going annual consulting fee can be
charged to clients who wish to have their plan assessed yearly,
and potentially re-designed based on utilization and growth of the
company.
Incentive 2:
Fees from a third-party administrator
When
a company chooses to outsource the administration of its dollar based dental benefits
plan, part of the monthly administration fee can be paid to the
broker—thus generating regular cash flow. Many companies
that implement these types of self-funded plans will retain these
plans, so that over the long term, they can prove to be a reliable
source of income for you for years to come.
Incentive 3: Dollar based dental benefits
are “door openers”
with client/prospect
Dollar based dental benefits
are innovative concept many employers have never heard about.
Introducing them to clients separates you from your competition.
Even if you receive no direct financial compensation by
implementing a client’s dollar based dental benefits plan,
you’ve acquired (or attained) credibility and won the client’s
trust; a satisfied client may present an opportunity for you to
bid on other lines of the company’s benefits business.
When talking about consumer-based products, start with a
discussion of dental.
Brokers may receive
Leads and materials – at no charge!
Annually,
the ADA generates thousands of leads from its print advertising
and direct-mail efforts. Many
of these
leads are followed up by CDBA members through a cooperative lead
sharing arrangement with the ADA.
How do
Dollar Based Dental Benefits work?
The
simplicity of DR is one of the benefits that make it so
attractive. Here’s
how it works:
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The
employee (or covered dependent) visits the dentist of his or
her choice, receives needed treatment and arranges for
payment.
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Employee
then presents either a paid receipt or proof of treatment to
the employer or TPA.
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Employee
is reimbursed for all or part of the expense, according to the
plan design or if a TPA is involved benefits may be paid
directly to the dental office.
DA
is also simple to administer. It works like this:
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The
employee (or covered dependent) visits the dentist of his or
her choice, receives needed treatment and the dentist submits
a claim form to the plan administrator for payment.
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The
plan administrator pays the dentist’s fee up to plan limits.
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The
dentist balance bills the patient for any portion of his or
her fee that is not covered by the Direct Assignment plan.
[Some DA plans also have a co-payment feature which covers the
administrative costs of the plan.]
Plan
designs vary widely among companies, but in all cases,
reimbursement is based on a percentage of dollars
spent, not on the type or category of treatment received.
Two sample plan designs are provided below:
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One
company may reimburse 100% of the first $200 of dental
expenses and 80% of the next $1,000, resulting in a total
annual maximum benefit of $1,000 per individual.
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Another
company might reimburse 100% of the first $100; 80% of
the next $500; and 50% of the remaining $500 of dental
expenses, resulting in a total annual maximum benefit of $750
per individual.
The
totals can be individual or family maximums.
The
task of the employer (or TPA) is simply to maintain an account of
employee utilization and reimburse employees (or assign benefits
to dentists) according to the plan.
In this sense, dollar based dental benefits can be compared
to the familiar reimbursement process for employee expense
accounts.
Your clients will
thank you!
By
removing many of the complex administrative features associated
with most dental plans, a dollar based dental benefits plan offers
ease in administrations as well as potential cost savings.
It can virtually eliminate their employees’ complaints
about exclusions and limitations on treatment.
In addition, these models can offer clients the following
significant advantages:
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Fewer
hassles. Employers
and benefits managers appreciate the simplicity of the dollar
based dental benefits concept, which allows for low overhead
costs via ease of administration - either in-house or
outsourced.
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Fewer
surprises. Since
these plans reimburse patients based on dollars spent on
dental care - not on the type of treatment received -
employers (and employees) can easily calculate, in advance,
what their share of the dental expense will be.
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No
monthly premiums. Instead,
employers pay only when actual treatment is received.
For that group of employees who never visit the
dentist, employers pay virtually nothing.
A DR
plan design, with its total annual maximum per covered employee, allows your clients to
control their costs according to their budgets. At the same time, it offers flexibility that will make their
employees smile:
-
Dollar
based dental benefits frees patients to plan needed treatment
with the dentists of their choice.
-
Dollar
based dental benefits cover virtually all procedures (except
cosmetic)—from cleanings to orthodontics to prosthodontics—equally.
(This aspect distinguishes DR from other types of plans, which
may, in effect, discriminate based on age by covering fully
the needs of young employees and covering only partially the
needs of older employees.)
Self-funding a dental
benefits plan
Some
employers may express initial hesitation about self-funding a
dental benefits plan. For
this audience, it helps to underscore the basic differences
between medical needs and dental needs.
Unlike medical costs, which can be unpredictable and
catastrophic—and therefore very appropriate for
insuring—dental costs are predictable and non-catastrophic.
Why insure a plan that is low risk and low cost?
Remind employers of the following important facts about
dental care:
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Dental
disease is preventable.
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The
public’s need for dental care is highly predictable.
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Dental
care involves relatively low costs and is easily manageable.
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People
do not over-utilize dental benefits.
These
simple differences between dental and medical care will help to
reassure plan purchasers that self-funding their dental benefit
plan may be the most sensible option.
Monitoring
Claims
Clients
may ask: Without usual, customary and reasonable (UCR) fees and
the participation of a third-party insurer, who’s monitoring the
claims and ensuring that dentists don’t overcharge for services?
What about the discounts that many managed care companies offer?
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Assure
your clients that dollar based dental benefits' claims
expenses may be tracked and monitored easily—and by the
people who care the most: the employer and the employee.
Employers (or their third-party administrator) review
employees’ claims as part of the on-going reimbursement
process.
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Moreover,
the employees’ direct participation in paying for dental
treatment results in more knowledgeable consumers, who read
their dental statements. The field of dentistry is far
too competitive to allow dentists to charge fees that are far
out of line with their professional peers.
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Many
dentists routinely offer discounts for patients who pay for
treatment up-front. No
matter what dental plan a company offers, the employer should
always encourage their employees to seek dental care providers
who work well with the company’s plan, offering high-quality
care at the most appropriate price.
UCR
fees, exclusions and limitations on treatment and dentists
networks—these have become part of many dental benefit plans as
a way to control costs; however, they also may generate costs of
their own, especially in the areas of administration and employee
satisfaction. Dollar
based dental benefits are innovations that allow a company to
limit costs completely within their budget without sacrificing
freedom and flexibility.
Next
Steps
Contact
any CDBA member for more
information about dollar-based dental benefits. We're happy
to share some personal experiences using this approach as well as
the advantages of becoming a full member of our organization.
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