Smile, you've got options: stable costs may distract employers from small but significant changes in dental benefits plans

HR Magazine, Nov, 2004 by Martha Frase-Blunt

In today's environment, where double-digit increases in health care costs seem to have transfixed employers, dental benefits--with their relatively low and stable costs--probably aren't attracting much attention. But there are noteworthy developments taking place below the surface.

Employers certainly can be forgiven if they've paid less attention to dental benefits than their ballooning health care plans. Unlike health coverage, dental coverage is relatively inexpensive, costing an average of $650 per year per covered employee--and costs can be even lower for dental plans offered through health maintenance organizations (HMOs) and preferred provider organizations (PPOs), according to estimates from PricewaterhouseCoopers LLC in New York.

"An employer paying $6,000 per employee for medical coverage tends to be very grateful for the dental benefit, which represents a high-visibility, low-cost offering that employees like and value," says Barry Barnett, principal of the Human Resources Solutions Group at PricewaterhouseCoopers.

Moreover, dental care is not experiencing the double-digit inflation seen in the medical and prescription drug arenas. According to 2004 data from The Segal Co., an independent, New York-based consulting and actuarial firm, cost increases for traditional fee-for-service, PPO and HMO dental plans have held steady for the past five years and are expected to be roughly the same in the coming year: 7.4 percent, 6.8 percent and 5.2 percent respectively.

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Costs have been held relatively stable by competition among the huge, nationwide networks of dentists put together by the big players--Aetna Inc. of Hartford, Conn.; Delta Dental Plans Association of Oakbrook, Ill.; MetLife Inc. of New York; and CIGNA Corp. of Philadelphia.

Another factor holding down costs is improved dental health: Levels of tooth decay and gum disease in children and adults have declined because of advances in oral health generally, through fluoridation, more and better oral hygiene products, and heightened awareness and education. Cases of dental caries (cavities) in the permanent teeth of school-age children have been declining since the early 1970s, according to data from the Healthy People 2010 project of the U.S. Department of Health and Human Services. Fewer adults are having teeth extracted because of dental decay or periodontal disease, and the percentage of people who have lost all of their natural teeth has been declining steadily for 50 years.

Yet even amidst this remarkable stability, some minor but important changes are taking place in the dental benefits arena.

Case in point: Providers say employers are demanding more-efficient plan administration and better service to employees. Some providers are responding. For example, some of the larger carriers now offer online information about claim status and costs of procedures, and they are expanding cost-effective options for smaller companies and for employers with lower-paid workforces.

Choosing a Dental Plan

For the most part, employers seem satisfied with the state of their dental coverage, and there tends to be very little switching of carriers and products--in part because dental plan costs do not differ substantially among insurers.

However, there are several other pivotal characteristics benefits specialists should compare, say experts, including:

* Size and scope of the carrier. Employers with multiple or nationwide locations should look for a carrier that offers broad networks that can cover your entire employee population.

"Our chief selling point to employers is the size and scope of our network," says Jeff Album, director of public affairs for the nonprofit Delta Dental of California, Pennsylvania and New York, the largest dental benefits administrator in the United States and a member of the national Delta Dental Plans Association. "In our markets, we have signed up three out of four dentists; in California, it is 92 percent."

Other big carriers can boast large participation numbers as well because providers are typically enrolled in multiple networks.

* Generous discounts. Compare carriers' special discount programs and offerings, and don't be hesitant about negotiating, says Barnett.

For example, small price-conscious employers can provide an "access plan" that offers simple discount cards for dental care and costs only $5 to $8 per month per employee. The typical discount is 30 percent off the standard fee for various in-network dental services, such as fillings, braces, exams and routine cleanings.

"One encouraging development on the access plan side is that these plans are no longer just the territory of the smaller niche dental companies. The recent movement of two of the largest carriers--Aetna and CIGNA--into this market is a positive development for those looking for a low-cost option," says Cathye Smithwick, senior associate for Mercer Human Resource Consulting in San Jose, Calif., and a former dental hygienist. "They have built-in provider networks for these products," which are marketed to small employers, service companies with high turnover and companies with a large number of low-wage hourly workers.