As with the Rocky Balboa story, many people would not pick a dental HMO over the long-standing champion, traditional insurance. But before automatically discounting the dental HMO (DHMO), consider the following.
The champion
In this corner, we have traditional coverage, arguably the most popular plan. The cornerstone of this classic plan is the freedom to use any dentist. With the frequency of at least two preventive visits a year, many people’s relationship with their dentist has become more important than that with their medical doctor.
Even so, traditional plans have been changing over the years from pure indemnity to passive dental PPO plans. They are referred to as passive because there is no penalty for using nonnetwork providers. If an employee does not use a network dentist, he or she has the same benefits as with the age-old indemnity plan.
Driven in part by some state laws, most dental PPO plans must offer the same deductibles, co-insurance and maximum payment limits whether patients use a network provider or not. Many times, employees who are enrolled in a passive dental PPO plan don’t even know or remember they have an incentive to use network providers.
The primary advantage of using network providers is that the employee participates in an average discount from UC&R charges of 25 percent, as well as no balance billing from the dentist. Despite this incentive, many employees are not motivated enough to change dentists. Even the largest networks in the country only cover one-third of licensed dentists. As a result, the reductions in premiums for these passive PPO plans compared to pure indemnity is only 4 percent to 8 percent. Nevertheless, Passive PPO is the current champion of dental plans.
The Achilles’ heal of these plans is their limit on benefit payments. The most common plan has a maximum calendar year benefit of $1,000. Although less than 7.5 percent of people enrolled have more than $1,000 a year in claims, over a five-year period, you could have 37.5 percent of your employees find the $1,000 limit a problem. Increasing the maximum to as much as $2,000 does not resolve this issue.
Because of this benefit cap, I refer to traditional dental plans and PPO plans as dental “assistance” not dental “insurance.”
The challenger
In the other corner we have the challenger, the leaner, tougher dental HMO.
The typical DHMO has no deductibles, no claim forms, uses predictable co-pays versus co-insurance, protects you from UC&R cutbacks and has no dollar limit on dental services. If you require $5,000 of dental services, you’ll get it. Last but not least, the premiums can be 50 percent less than those of traditional or PPO plans.
Many companies have purchased a DHMO on this simple comparison, but you must truly understand the limits of DHMOs before determining if it’s right for your employees.
The biggest hurdle is the network. You must receive services exclusively from providers within the network. The lists are much smaller than those for even PPO networks, and in some rural areas, they are non-existent.
The other concern is that procedures outlined in the benefit summaries are the only services covered. There are hundreds of different procedure codes for dental services. If a procedure is performed that does not match one on the list, it’s not covered. This is one of the reasons employees should take their benefit summaries with them to DHMO dental appointments.
Some employees may also find difficulty in scheduling their first preventive service. Although not uncommon with any dentist, DHMO dentists typically push preventive services like your semi-annual teeth cleaning four to six months out. Of course, if you have any pain or require immediate attention, a DHMO patient will be seen immediately.
The DHMO is not the best fit for everyone. If you’re interested in a DHMO, consider offering both it and a traditional plan, letting employees choose which is right for them. Typically, 30 percent of employees will choose the DHMO over the more expensive traditional or PPO dental plan.
Educating employees on the advantages and disadvantages of the DHMO is critical to a successful DHMO program. If you want a dental plan that can go 15 rounds, like Rocky Balboa, then the DHMO and its unlimited benefits can be the champion. Bruce Bishop ([email protected]) is director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to more than 400 corporate accounts, ranging in size from 20 employees to more than 7,000. Reach Bishop at (770) 425-6700 or (800) 874-2244, ext. 205.
