Since the early 1970s, group dental insurance has been one of the fastest-growing employee benefits. It has been estimated that in the past 25 years, the percentage of employees who have dental coverage has grown from about 5 percent to more than 60 percent. More than 90 percent of firms with 500 or more employees make coverage available. Many employee benefit consultants feel that by the early part of the next century most employees, except for those who work for very small employers, will have dental coverage.
To a great extent, group dental insurance contracts have been patterned after group medical expense contracts, and they contain many similar, if not identical, provisions. Like group medical expense insurance, however, group dental insurance has many variations. Dental plans may be limited to specific types of expenses or they may be broad enough to cover virtually all dental expenses. In addition, coverage can be obtained from various types of providers, and benefits can be in the form of either services or cash payments.
The concept of managed care has had a significant role in the evolution of group dental insurance plans. However, this role has been somewhat different from that in medical expense plans. Group dental plans are more likely than medical expense plans to provide benefits on a traditional fee-for-service basis, but they are also more likely to take a managed care approach to providing those benefits. The most common example of the latter is the emphasis on providing a higher level of benefits for preventive care. As group dental plans have become more prevalent, the percentage of persons receiving preventive care has continued to increase; as a result, the percentage of persons needing care for more serious dental problems has continued to decrease.
One other difference between group medical expense plans and group dental plans is that providers of managed dental care arrangements have been more likely to offer coverage to very small groups.
Providers of Dental Coverage
Group dental benefits may be offered by insurance companies, dental service plans, the Blues, and managed care plans. Like medical expense coverage, a significant portion of dental coverage is also self-funded. An employer may either self-administer the plan or use the services of a third-party administrator. In either case, the plan may use a preferred-provider network to provide dental services.
Insurance Companies
Insurance companies are a major provider of dental coverage, often on an indemnity basis. Coverage is usually offered independently of other group insurance coverages, but it may be incorporated into a major medical contract. If it is part of a major medical contract, the coverage is often referred to as an integrated dental plan, and the benefits are frequently subject to the same provisions and limitations as benefits that are available under a separate dental plan.
Dental Service Plans
Most states have dental service plans, often called Delta Plans or Delta Dental Plans that along with the Blues write approximately one-quarter of dental coverage. However, the extent of their use varies widely by state, and western states generally have larger and more successful plans than states in other parts of the country. The majority of these plans are nonprofit organizations that are sponsored by state dental associations. In addition, they are patterned after Blue Shield plans, and dentists provide service benefits on a contractual basis. Also like Blue Shield, state Delta Plans are coordinated by a national board, Delta Dental Plans, Inc.
Blue Cross and Blue Shield
Many Blue Cross and Blue Shield plans also provide dental coverage. In some cases, the Blues have contractual arrangements that are similar to those that dental service plans have with dentists; in other cases, benefits are paid on an indemnity basis just as if an insurance company were involved. Finally, a few of the Blues market dental coverage through Delta Plans in conjunction with their own medical expense plans.
Managed Care Plans
A significant and growing amount of dental coverage is provided through managed care plans, often sponsored by insurance companies or the Blues. However, the majority of dental benefits are provided through traditional fee-for-service plans. Because dental expenses are more predictable than medical expenses, the emphasis on preventive care by managed care plans provides a real potential to hold down future costs.
Coverage can be obtained from dental health maintenance organizations (DHMOs), which operate like health maintenance organizations but provide dental care only. Like HMOs, DHMOs can take the form of closed-panel plans or individual practice associations. Estimates are that about one-quarter of employers offer a DHMO option to employees but usually as an alternative to a fee-for-service plan.
Coverage can also be obtained from PPOs, which have enjoyed rapid growth in recent years. Point-of-service plans have also become increasingly common for providing dental coverage.
Self-Funded Plans
For several years, it has been common for large employers to self-fund dental benefits, and recently the concept has spread to smaller employers. Under the technique, often called direct reimbursement, the employee visits the dentist, pays the bill, and then submits the bill to the employer or a third-party administrator for reimbursement. This process often generates significant savings for the employer, largely because of a significant savings in administrative costs. The claims process is relatively simple because most reimbursements are small in size, and large claims do not exist because of caps on benefit amounts. The number of claims is also fairly stable from year to year. One problem that often occurs in self-funding of benefits is the lack of control over utilization. However, this has been a minimal problem in dental treatment because employees seem to be reluctant to visit the dentist unless it is absolutely necessary.
