Delta Dental

Trimming Around the Dental Benefit

Simple steps to keep a popular part of the compensation package

Many companies have to do more with less during these days of economic uncertainty and double-digit increases in the annual cost of medical coverage. Dental benefits can help. They are relatively inexpensive and very popular. They can help retain core employees and keep them healthy and happy.

These are some of the reasons to keep dental benefits in a company's compensation package. There are several tactics that make it possible to do so.

Employee expectations: perceived and the actual value

Dental benefits are popular with employees and can help them feel good about their employers during slow economic times, by providing access to desirable dental care for themselves and their families. In some cases where oral health is closely linked with general health, dental benefits might even help employees stay healthier and on the job when leaner workforces call for peak productivity.

Even in the current labor market, more than 70 percent of respondents to a survey from market researchers Taylor Nelson/Sofres said it is important for employers to provide dental coverage. Most did not view rising medical costs as a good justification for cutting dental benefits, which are far more stable and far less expensive in their annual cost increases. This survey from 2002 had results similar to those found in earlier studies to determine the popularity of dental benefits. They include a 1999 LIMRA International study, which found that dental coverage is the second most popular benefit in compensation packages, next only to medical insurance.

There are a number of sound business reasons - from attracting qualified recruits to managing overall healthcare costs - for employers to respond to this popularity by offering dental benefits. Once they have them, here are some ways for companies to hold onto their dental benefits:

Personal participation in personal care

Two of the most common ways to adjust expenditures on dental benefits are to raise deductibles for non-preventive care and increase employee contributions.

Annual increases in dental premiums have been reasonably consistent, usually in the mid-single digits each year. One of the reasons for this stability is that dental benefits emphasize preventive care. Cleanings and checkups take less time and money than do restorative or emergency procedures, and the cost for such treatments can be reduced significantly when employees use their benefits preventively. For instance, a study published in Public Health Reports states that preventive dental care, early detection, and proper treatment save the U.S. $4 billion annually.

Companies facing exploding health care costs can get their employees personally involved in cost control by providing financial incentives to seek preventive dental care. When companies cover 100 percent, or the highest possible percentage, of preventive services, but increase employee deductibles or co-pays for non-preventive treatment, employees have more responsibility for keeping up with biannual dental checkups.

In cases where companies have to pass the annual increase directly on to employees by increasing employee contributions, they might also want to consider raising their plans' maximum available benefits. Raising plan maximums is a tactic that is regarded favorably by employees and doesn't necessarily result in significant additional cost for companies. This could be a good way to balance cost increases with employee satisfaction.

As HR managers tighten up their companies' compensation packages, they might also use dental benefits to offset changes in other perks. For instance, maintaining, or even beefing up, dental benefits might help to mitigate employee dissatisfaction when a company has to shift higher medical costs or cut some medical benefits.

Design for the times

As circumstances change, so can the design of a company's dental coverage. Companies have a number of dental plans to choose from, including a range of managed care options, point of service plans, and voluntary programs.

Some companies can cut expenses by changing their level of managed dental care - going from an indemnity plan to a PPO plan, for instance. As always, employees' satisfaction is a concern, and they might not be happy if they have to switch dentists. But when cost is a concern for both employers and employees, a switch of this kind might be worth it for the cost savings.

Of all the dental plans, DHMO plans offer the highest level of managed care, and interest and enrollments in them tend to increase during economic downturns. DHMOs are a good option for companies that want to offer a dental plan that is fairly aggressive in controlling costs, especially when being able to offer the benefit at all is contingent on such cost consciousness.

Companies that want to maintain or even add a dental benefit in lean times might fund a low-cost benefit and ask employees who want more expensive coverage to pay the difference. A company offering coverage through a DHMO can also offer employees a buy-up option so that they can pay up to the level of a PPO or indemnity plan.

Sales of voluntary, employee-pays-all dental plans are also growing, and demand is expected to increase in the future. Voluntary plans provide a cost-free method for companies to add dental coverage to the menu of benefits they offer their employees. It's another indication of how popular dental benefits are that companies that offer voluntary plans are often pleasantly surprised by how many of their employees participate in them.

One final option is referral plans. Referral plans are not insurance plans per se; insurers do not make payments or reimbursements to dentists or patients, and companies do not subsidize them. Employees pay for all of their dental services themselves, but the dentists providing services offer them at discounted rates, which are negotiated for the company's employees.

Here to lend a helping hand

In addition to offering a range of managed care options, dental insurers can help companies control their costs by being diligent about provider relations, utilization review, fraud and abuse management, and technological upgrades.

Strong provider relations are important because monitoring network dentists is a balancing act that requires professional sensitivity. Insurers that work hard at their relationships with participating dentists are in a better position to negotiate provider reimbursement levels during economic doldrums.

Dental coverage is distinct from medical coverage in that the more it is used for prevention the less it costs. People who visit the dentist regularly are more likely to stave off serious and costly oral-health problems, but over-utilization, fraudulent claims and procedures can run up the cost of care. Insurers that do a good job with utilization review and provider credentialing are best at controlling these costs. For instance, Delta Dental's cost-control measures and contractual agreements with dentists helped save groups more than $2.6 billion in 2001.

Improvements in cost containment have already been made through the automation of many administrative tasks and functions, and Web-based administrative technology helps insurers save companies money and keep their dental benefits viable. On-line administration can also make it easier for employers to offer a number of choices in plan design and provide all the information employees need to choose the plan that's best for them.

The bottom line

Since attractive benefits help keep employees on the job, Human Resources managers can spend less time managing turnover. When employees and their families get access to services that prevent or fix dental problems before time-consuming remedies are required, they can spend less time at the dentist and more time at the office. That's particularly important when companies are trying to do the same work with fewer employees.

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