Reviewing the past five years of "Competitive Advantage" columns, we have discussed products many times -- life insurance, disability income protection, critical illness and long term care. Recently, a report published by Eastbridge Consulting caught my eye. In the report, "Employee Benefit Brokers and Voluntary - the Evolution Continues," published in September, there is a reference to dental insurance as being the No. 1 product benefit brokers see moving to voluntary from employer-paid status, and dental insurance was also the most commonly sold voluntary product. So I decided that a checkup on dental insurance and design trends in dental coverage is overdue.
First, let's consider the biggest danger point in a dental insurance plan - the "back room." Why is the back room relatively more important than in any other ancillary benefit product? The fact is that dental coverage has highly transactional claims, with nearly 100 percent of covered members presenting at least one claim a year, and most submitting multiple claims. I remember the days when we had four kids at home, with many years where we sent in dozens of claims, not to mention putting the orthodontic benefits to use for about 10 years in a row. So the place to start evaluating a dental plan is in the claims area. Check out the reputation of the claims department - speed, accuracy and a good claims call center are the items to evaluate.
Working backward in the process from claims, one place to watch is the delivery of ID cards. On either employer-paid or voluntary plans the effective date of coverage could be very close to the plan enrollment date. If there is not enough time to deliver permanent ID cards, temporary ID cards, which can validate claims eligibility, should be available at enrollment. The fastest way to get a dental plan off to a poor start is to have claims denied on a brand new group. Make sure the insurance company, the employer and enrollees all have the same understanding as to the plan effective date, eligibility and claim procedures during the plan installation.
Moving to product features, the key to look for is flexibility of plan design. As noted above, many employers and brokers see a transition of dental coverage from employer-paid to voluntary. This is often a takeover, and just as in any group benefit takeover, the ability to match the previous plan design is essential. Take care to note the desired maximum. Be sure to note whether the prior coverage had a "maximum rollover" benefit that raised the maximum for those with favorable claims history. If so, the new carrier should be positioned to take over the higher maximums. The rate structure, the deductible, and whether preventive services count toward the annual maximum are important items to note. If any covered services had a waiting period, the takeover should be structured to provide credit for the prior coverage.
Many carriers in today's market are designing plans that include moving services from the "Major Services" class into the "Basic Services" class (to provide richer co-pay benefits on selected services). That's another feature to watch for. PPO designs using a network to pass on negotiated savings are important considerations in many parts of the country. The network itself is an important element, because you'll want to provide access to a good percentage of dentists in an area at the PPO rate. "Active" designs have a lower co-pay for out-of-network services and "Passive" designs have the same co-pay percentage for in- and out-of-network dentists but there is a premium pricing advantage to the group (and no balance billing when in-network dentists are used).
Finally, in today's market, cost-saving plan design options may be considered instead of those resulting in richer benefits. Lower plan maximums, higher deductibles, lower co-insurance levels and tighter PPO rules can result in savings in this tight economy.
Marty Traynor is vice president of voluntary benefits at Mutual of Omaha. He can be reached at
marty.traynor@mutualofomaha.com.
