Dental & Vision Insurance Buyer's Guide

Introduction

Paper cuts and toothaches both hurt more than they should. But while the pain of a paper cut will diminish on its own, a toothache can take hundreds, if not thousands, of dollars before the pain goes away.

Enter dental insurance. Once considered a big company perk, dental insurance has established itself as a must-have benefit. In fact, according to a Society for Human Resources Management survey in 1999, 83% of small businesses offer dental insurance.

Dental care contributes to the all-around health of your employees. Low-cost preventive procedures, like cleanings, contribute to the overall health of your employees, which means a decrease in sick time.

If cost is holding you back, consider this: dental coverage is less than 10% of the cost of medical coverage -- it's more affordable than you might think.

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Types of Plans

Dental insurance isn't cut and dried. There are different plans, and then variations within those plans. Take time to get to know each plan before making a choice.

Most expensive: direct reimbursement plans
Direct reimbursement plans operate by paying for dental coverage with a pool of money that the company sets aside specifically for this purpose.

This self-funded plan's greatest strength is that it's straightforward - employees are reimbursed according to a simple formula that does away with the complexity of deductibles and the like.

Unfortunately, even though this is the type of plan that the American Dental Association recommends, directly covering the cost of dental care can be cost-prohibitive for small businesses.

Less expensive: indemnity plans
Indemnity plans can be more feasible. Premiums are paid to an insurance company; in turn, the insurance providers pay dentists for the treatments they provide. This self-funded plan's greatest strength is that it's straightforward - employees are reimbursed according to a simple formula that does away with the complexity of deductibles and the like.

Premiums are set for the year with indemnity plans so as a business your costs are known. But as for your employees, costs are a little less straightforward.

Insurance companies generally use UCR (usual, customary and reasonable) rates to base their reimbursements to dentists-- if the UCR rates used to pay dentists is less than the dentist's rate, the patient can potentially be on the hook to make up for the shortfall.

Patients also need to pay a deductible, averaging $50, and then a portion of the remaining amount - what is known as a co-payment. An average plan covers 100% for preventive measures like cleanings, 80% for basic work like a crown or cap, and 50% for major procedures like oral surgery

Least expensive: managed care plans
Like a medical HMO, managed care dental plans require that patients choose from a pool of dentists and pay a co-payment for treatment.

Unlike the fee-for-service plans above, managed care plans do have cost-control measures and can be a little more affordable for small businesses.

The co-payment amount can vary according to procedure, though. While preventive procedures usually are performed without a co-payment, more advanced procedures will have higher co-payments.

There are two types of managed care programs.

PPO. Preferred Provider Organization programs consist of a network of dentists. The dentists within the network have discounted their fees in order to participate in the plan.

Employees have to pick from this pool, or pay penalties (a higher deductible or co-payment) to go to the dentist not in the network.

DHMO. Dental Health Maintenance Organization plans work like PPO plans. Patients choose from a network of dentists.

Instead of just discounting their fees, dentists will perform specific treatments for free. Dentists are paid a fixed fee per individual-even if the patient never even receives treatment. In turn, the dentists will provide treatment for free (for something involved or for frequent visits by one individual, a co-payment or fee may be charged).

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What's Best for You?

Because of their cost-control measures, managed care plans are an affordable choice for small businesses (DHMOs are cheaper than PPOs). And small businesses seem to agree; these plans are currently the most popular choice.

However, although it's the cheapest for your business, it's not necessarily the best plan for your employees. They may have to wait a while for reimbursement.

Also, certain major procedures may be limited in the number of times they are covered in a given period of time.

But all and all, the pool of dentists in managed care plans are not just picked, but are screened and are top-rate. And the plan gives employees flexibility-they aren't prohibited from going outside the pool. Meanwhile, it's affordable for employers.

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Pricing

How much you'll pay for your dental coverage completely varies, depending on number or employees, plan, employee contribution, and the cost containment you impose.

You may also have employees that choose not to participate in a dental program, that will raise your premium.

A normal annual coverage per patient is $1,000-1,500.

Companies normally cover 25-50% of monthly premiums.

Whichever plan you choose, you will need to make sure the program elements meets your needs, so don't rush your decision. With the right plan, you'll keep star employees where they should be: at your company.

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Buying Tips

Uncover the coverage
Make sure to learn the details about the dental treatments that are covered and not covered when comparing dental plans.

Dentist check up
One of the best ways to get the scoop on how good plans are is by asking your dentist.

Low-budget alternative?
If you have a tight budget, consider a Section 125 cafeteria plan. With it, employees can pay for dental care through pre-tax payroll deductions.

Description of benefits
By law, every person covered by dental insurance should have a Description of Benefits -- a handbook that details each patient's coverage. Check out the Description of Benefits handbook before choosing a plan to make sure it's clear and easy to understand.

Changing plans
The American Dental Association [www.ada.org] offers a free service to review your business' dental insurance and explain the level and scope of your coverage. Contact them if you have questions about revising or changing your current dental plan.

Communication is key
You have choices when it comes to dental insurance plans. Once you've chosen one, communicate with your employees about how it is working for them, and let your insurance company know if there's any problems. If it isn't pleasing you or your employees, consider another plan or carrier.

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Introduction

By now you know that hiring and keeping good employees means offering a loaded benefits package. It's becoming pretty common for vision insurance to be part of these packages.

In fact, a 1999 survey by the Society for Human Resource Management shows that more than half (58%) of businesses with fewer than 100 employees offers vision insurance.

Vision insurance is one way to load up your business' benefit package - and it's probably cheaper than you think.

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What's Covered?

Like any insurance, vision care plans vary. They can range from plans that just cover the bare minimum to expansive plans that cover high-cost eye treatments.

More often than not, coverage is going to be somewhat narrow, especially an affordable plan for a small business.

A typical plan for a small business will cover routine eye exams (one per year), prescription eyewear (glasses and contacts), and glaucoma screening. Visits can be made to an optometrist or ophthalmologist. Some average plans will also cover "usual and customary" treatment fees that result from a routine eye exam.

If you get your plan from an HMO, coverage generally will restrict patients to seeing optometrists and ophthalmologists that are within a network.

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Shopping For Coverage

You have a few options when it comes to buying vision insurance: namely, HMOs and insurance carriers.

You can also offer it under your business' cafeteria plan (click here for related article), which offers an array of benefits and lets employees pick and choose what they want.

Also check into your health insurance carrier. They can offer vision insurance as part of your health insurance policy, but it may be pretty narrow, covering only the bare minimum -- like routine eye exams.

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Cost

Vision insurance is quite cheap. Expect to pay in the area of $50 (per individual/per year) for an average plan through an HMO, insurance carrier, or otherwise. Employers generally contribute 25-50% of the individual's annual premium.

If you do decide to go through your health insurance provider, you may save a few pennies but the plan may end up too narrow for your employees' liking. The cost will be tacked on to the employee's health insurance premium.

There are many different plans and insurance carriers-major insurance carriers as well as smaller independent carriers offer coverage. Get at least three quotes (many places let you do it online) and then do some comparing to get the best price.

Patients may have to pay up front for the visit and get reimbursed, or the optometrist may handle payment directly with the insurance company.

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Should You Offer It?

Whether or not you should offer vision insurance, or any other extras in your benefits package, is always a question that plagues businesses-especially small businesses that just don't have the extra cash.

Sure these extras will cost you; you most likely are going to contribute to the premiums.

But take a step back and look at the big picture. You don't need a fancy plan that covers eye surgery, because the majority of your employees will never need it. You can offer the inexpensive basic plan that covers routine eye exams and prescription eyewear. That's what your employees want and need.

And it's those extras that pull in and keep high-quality employees.

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