Keep Your Clients Smiling During Tough Economic Times
by Laurie S. Laspina

“You can’t be stupid and poor at the same time.” These wise words were spoken by a single mom trying to teach her daughter that, when money is tight, they need to be smart about how they use their limited financial resources. It’s relevant advice for all of us in these tough economic times; we need to educate ourselves to make smarter spending decisions. We cannot pick up a financial magazine or turn on a television finance show without hearing similar recommendations from the pros. We are told to save as much as possible and avoid splurging on nonessential items.
   
More than likely, your clients are not immune to the challenges of the difficult economy. As the cost of medical insurance continues to increase, some clients may be tempted to drop ancillary coverage, like dental insurance. It’s during times like these that your clients will be looking to you for informed, intelligent solutions for managing their dental insurance costs.

The Benefits of Dental Insurance

At first glance, employers might see dental insurance as a luxury. However, the connection between oral and overall health is widely accepted in the dental and medical communities. In recent years, researchers have found that poor oral health is associated with a wide range of health problems including cardiovascular disease, low birth weight and preterm births, diabetes, respiratory disease, and certain types of cancer. In addition, employed adults lose more than 164 million hours of work each year due to oral health problems or dental visits, according to a 2006 report by the CDC. A dental insurance plan is a relatively small investment compared to the cost of medical premiums. Dental insurance might also reap rewards for employers down the road by holding down healthcare cost increases and lowering employee absentee rates.
   
If providing dental insurance is a smart decision from an overall health perspective, how can you help your clients see it as a smart financial decision as well? One option is to suggest ways to reduce their dental insurance premiums while still offering affordable, quality coverage to employees. There are many ways to help employers control the costs of a dental insurance program including cost sharing, plan design, voluntary plans, and employee utilization.

Higher Employee Cost Sharing

One of the most common ways to control dental insurance costs is to require employees to share in the cost of their dental plans. This usually involves increasing the portion of the premium that the employee pays. Careful selection of the employee cost share can encourage efficient utilization, which saves money at the member level and the plan level.

Plan Design

The plan design can have a significant effect on premiums. There are many opportunities to reduce employer costs through careful attention to plan design. However, it’s best to implement only one or two of these changes at a time to avoid drastically reducing plan benefits and employee satisfaction. Here are eight ways to reduce dental plan costs:
1. Offer a dental HMO (DHMO), where available, as part of a dual option or in place of a PPO: California has strong DHMO networks. A well-managed DHMO plan can offer more benefits for a lower cost than any other form of dental plan.
2. Reduce the plan’s annual maximum: On average, only 2% of dental plan members ever reach or exceed a dental plan’s $1,500 annual maximum and about 9% reach or exceed a $1,000 maximum.
3. Add or increase the annual plan deductible for all services except for diagnostic and preventive services: The typical PPO has an annual deductible of $50 per person ($150 per family). A deductible increase of $25 per employee ($75 per family) can reduce the annual premium by 2% to 4% depending on the plan design.
4. Reduce out-of-network reimbursement levels: Reduce fee allowances for non-participating dentists from the 99th or 90th percentile to a level that is equal to what participating dentists are paid.
5. Cover only essential services: About 50% of dental services are elective. Including optional services such as implants, treatment for temporomandibular joint dysfunction, and veneers as covered benefits can increase premiums by up to 15%.
6. Limit payment for major services to 50%: While basic restorative (Class II) services should be covered at 80%, services such as crowns, fixed partial dentures, extraction of impacted teeth, root canal therapies, and other major services (Class III) should be covered at 50%. This higher cost sharing for major services will reduce premiums and give members an incentive to protect their dental investment with good oral hygiene.
7. Add waiting periods: Waiting periods can be used for new hires and current employees who have not had prior coverage under another dental plan. Waiting periods are usually six, 12, or 24 months, representing the length of time an individual must be enrolled in the plan before benefits are payable for the designated services. Including a waiting period for Class II or Class III services and orthodontia helps reduce adverse selection when an individual with no prior coverage enrolls for a short period in order to get major services.
8. Change from a passive to active PPO: For example, change from a plan offering 100/80/50 coverage levels both in-network and out-of-network to one offering 100/80/50 in-network and 80/60/40 out-of-network.

Voluntary Plans

If you have clients whose financial situation precludes them from offering an employer-contributory plan, suggest that they offer their employees a voluntary DHMO or PPO. This option costs the employer little or nothing, but provides valuable benefits to employees. Employees bear the entire cost of a voluntary dental plan, but it should offer them better benefits at a lower cost than can an individual plan.

Employee Utilization

You may want to suggest the following to your clients:
• Offer dental plans that cover 100% of preventive care with no deductible. This encourages members to get regular dental checkups and treatment for minor problems before they become advanced and costly to treat.
• Encourage PPO members to choose a network dentist. The employer should provide examples of the benefits, including cost savings, they would realize by doing so.
• Give employees information about the importance of maintaining good oral hygiene and the connection between oral and overall health.

Most dental insurers are happy to give their clients and members information about the importance of good oral hygiene, the connection between oral and overall health, and the benefits of using network dentists.

Better Times Lie Ahead

Tough financial times affect everyone – employers and employees alike. We all need to make smart choices when it comes to our finances. Encourage your clients to let their employees know that they are doing everything they can to continue providing a comprehensive benefits package, including dental insurance. They should explain that these costs need to be shared so that both the company and employees can weather this economic environment. Out-of-pocket cost increases will be relatively small for the majority of employees if your client only institutes one or two of the recommended cost-saving measures.

The good news is that, historically, the economy is cyclical and better times should be ahead. Smart choices now will enable us all to prosper when the good times return.
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Laurie S. Laspina, regional vice president for United Concordia, is in Woodland Hills, Calif. She is responsible for the retention, growth, and support of clients in the Pacific region. Laurie has been with United Concordia since 1992 and has more than 21 years of dental industry experience. United Concordia, headquartered in Harrisburg, Penn., is one of the nation’s largest dental insurers, serving more than 7.7 million members worldwide. For more information about United Concordia’s dental products, visit www.unitedconcordia.com.