Types of Dental Plans - Dental Benefits
In many ways, the coverage of dental care mirrors the benefit plans used to cover medical care. These "Commercial Plans" fall into two categories: Managed Care Plans, and Fee-For-Service Plans
Managed Care Plans
Preferred Provider Organization (PPO)
Preferred Provider Organization (PPO) programs are plans under which patients select a dentist from a network or list of providers who have agreed, by contract, to discount their fees. In PPOs that allow patients to receive treatment from a non-participating dentist, patients are penalized with higher deductibles and co-payments. PPOs can be fully insured or self-insured. They are usually less expensive than comparable indemnity plans and are regulated under the appropriate insurance statutes in the company's state of domicile and operation.
Benefits of PPO Plans - They are less expensive than indemnity plans. Employer may be able to customize plan’s benefit levels and covered services. Similar to an indemnity plan, however, plan contracts with dentist to provide service for a reduced rate. PPO plan can limit the co-payment the dentist is allowed to charge, thus reduce employee’s out-of-pocket expenses. Plans regulated by state laws. Private employer-sponsored plans protected under ERISA.
Limitations of PPO Plans - They are limited to panel of participating dentists. Employee may be required to change dentists. This could discourage patients from seeking care. Reduced benefit if patient is seen by a non-participating dentist. Exclusive Provider Organization (EPO) does not cover any expenses when a patient is seen by a non-participating dentist. Annual calendar maximum.
Dental Health Maintenance Organization (DHMO) / Capitation Plan
Dental Health Maintenance Organizations or capitation plans pay contracted dentists a fixed amount (usually on a monthly basis) per enrolled family or individual, regardless of utilization. In return, participating dentists agree to provide specific types of treatment to the patient at no charge (for some treatments a co-payment may be required). Theoretically, the DHMO rewards dentists who keep patients in good health, thereby keeping costs low.
Benefits of DHMOs - Least expensive dental plan. Predictable co-payments or no co-payments. Preventative care generally provided at no cost to patient. Incentives for preventative treatment. Early diagnosis and preventative treatment keeps costs down. HMO plans are regulated by the Department of Managed Health Care. Plans are mandated by law to establish internal review processes for quality assurance.
Limitations of DHMOs - Employee must select Primary Care Provider (PCP) from a list of participating dentists. Employee may be required to change dentists. This could discourage patients from seeking care. No benefit paid if patient does not seek treatment from PCP Non-routine or major services require substantial patient co-payments, or may not be covered by plan. Dentist assumes financial risk. Dentist receives a monthly “capitation” fee (per head) for each patient assigned to practice, regardless of actual service performed. Treatment may be discouraged and quality of care could be compromised. Practice may limit number of patients seen each month, thus limit patient’s access to care. Patient removed from actual cost of dental care; may not understand the value of the service provided. Annual calendar maximum.
Fee-for-Service Plans
A Fee-For-Service Plan, generally referred to as an indemnity plan, is a fully insured or self-insured plan where an assigned payment is provided to dentists for specific services, regardless of the actual charges made by the provider. Payment may be made to enrollees in the form of reimbursement payments, or directly to dentists.
Group Fully-Insured Indemnity Plans
Benefits of Group Fully-Insured Indemnity Plans - Employee may see any dentist. Fixed premium for 6-12 months. Fee-For-Service; benefits paid off a UCR schedule. Preventative services are usually paid at 100%, basic services at 80% and major services at 50%. Basic orthodontic coverage may be included. Plans regulated by state laws. Private employer-sponsored plan protected under ERISA.
Limitations of Group Fully-Insured Indemnity Plans - Most expensive type of dental plan. Limit of calendar-year maximum of $1,000-$2,000 in expenses. Excluded coverage for esthetic dentistry, implants, treatment for TMJ. Annual deductible of $50-$150 Patient is financially responsible for the balance remaining from the UCR fee to the actual fee charged. Waiting periods may apply.
Group Self-Funded Indemnity Plans
Benefits of Group Self-Funded Indemnity Plans - Employee may see any dentist. Fee-For-Service; benefits paid on a UCR schedule. Less expensive than a fully-insured indemnity plan. Claims usually paid directly to dentist. Private employer-sponsored plans protected under ERISA.
Limitations of Group Self-Funded Indemnity Plans - Employer bears sole financial responsibility; premiums are paid to a trust fund. Employer costs are not fixed, cost varies depending upon utilization. Employer responsible for selecting and paying for Third Party Administrator. Check references of TPA. Self-funded plans are regulated by state law.
Direct Reimbursement (DR)
A self-funded dental benefits plan that reimburses patients according to dollars spent on dental care, not the type of treatment received. It allows the patient complete freedom to choose any dentist. Instead of paying monthly insurance premiums employers pay a percentage of actual treatments received. Moreover, employers are removed from the potential responsibility of influencing treatment decisions due to plan selection or sponsorship.
Benefits of Direct Reimbursement Plans - Employees have freedom of choice to see their own dentist. No interference from insurance with patient-provider relationship. Employer determines benefit level. Employees have control of how they use their benefit dollars. Employees are directly involved in the payment process. Low administrative cost. Some employers may chose to self-administer or select a TPA. Almost all monies go directly to dental benefits. Private employer-sponsored plan is regulated by ERISA.
Limitations of Direct Reimbursement Plans - Less predictable than a premium plan; costs vary month to month depending upon utilization. Plan is not regulated by state law. Employees may be required to pay dentist directly for services and are later reimbursed by the employer. This inconvenience can be avoided if employer establishes plan to directly pay dentist.
Discount Dental Plans: An Alternative form of Dental Coverage
Discount Dental Plans plans are not insurance plans. They provide no dental care service, do not have a schedule of benefits, do not pay providers for services given, and assume no responsibility for the quality of care. Discount plans offer a panel of dental providers that have agreed to offer services at a reduced rate. The patient pays for all dental expenses out-of-pocket, thereby assuming 100% of the risk. In California, discount plans are not regulated by state law.
Benefits of Discount Dental Plans - Provides employees purchase discounted dental services, similar to “discount membership club” No interference from insurance with patient-provider relationship. Membership fees predictable; no changes Employees have complete control of what benefits or treatments to purchase Administrative cost nonexistent for employers
Limitations of Discount Dental Plans - Plans unregulated (not considered “insurance plan”) No guarantee that the fees charged are actually discounted, or that they’re discounted for every procedure Plans do not pay dentists; payment for services come completely from the plan member (although at a discount) As unregulated entities, there is no assurance of quality of care from network providers
Definitions
An employer group purchases and maintains insurance coverage for its employees. Premiums are paid by the employer and may require the employee to partially or fully pay for coverage with pre-tax income deductions. The employer may customize the plan with the insurance company with regard to benefits, employee deductibles/co-pays, covered treatment, and annual maximums.
Private employer-sponsored group benefit plans are regulated by the Employee Retirement Income Security Act of 1974 (ERISA), under the Pension and Welfare Benefits Administration, U.S. Department of Labor. ERISA sets standards for administering theses plans, requires financial and other information to be disclosed to plan participants, and sets requirements for the processing of benefit claims.
Group and individual fully-insured indemnity and Preferred Provider Organizations (PPO) plans are regulated by state law. Consumers make seek assistance in resolving claim issues with the California Department of Insurance. Group self-funded plans are not regulated by state law.
Health Maintenance Organizations (HMO) plans and some PPO plans are regulated by the California Department of Managed Health Care. Once a consumer has exhausted the plan’s internal grievance system without success, the consumer may seek assistance with the DMHC.
An individual purchases insurance offered through the employer with post-tax income deductions or purchases insurance coverage through a broker or directly from insurance company. Individual plans are not protected by ERISA. The majority of individual dental plans available are Health Maintenance Organizations.
Source: California Dental Association [link]
