Organisations of all sizes offer multiple types of dental plans to their employees. A practice can select from a variety of plans provided by insurance organizations. While there are many options available, everyone needs to understand the insurance plans offered to their staff by employers.
Since plans can get difficult to comprehend, understanding the differences can help the organization and the employee. Companies can choose from PPO (Preferred Provider Organization) plans, FFS (Fee-for-Service) plans, or DMO (Dental Maintenance Organization) plans, among others. These options offer patients a variety of network choices.
When it comes to dental care, the terms commonly heard or used when it comes to insurance plans are a fully insured plan and a self-funded dental plan.
How do such plans work? These plans operate under different rules. The company needs to evaluate plan options and decide how they can help the company and its employees.
It is a benefit plan administered by a company that funds the plan. It does not pay premiums to an insurance company for employee coverage. These plans are made available to eligible employees of the practice. For this type of plan, the self-funded employer or practice bears the risk for processing any claim that needs to be paid.
In such cases, the employer pays the employee's benefits in full. The insurance firm will not be liable for any payment.
A self-funded plan can be managed in-house or through a third-party administrator (usually called a TPA). The advantage of a TPA is that it can offer additional administrative services to lighten the dental staff’s burden. Some of these services include actuarial services and other related services.
Any fund needs money to work. In the case of a self-funded plan, the organization must deposit a fixed sum of money in a trust fund at a defined interval. The fund will then be used by the TPA or the in-house team for processing claims and making payments.
There can be cases of more claims being processed as compared to the funds available for that period. In such cases, payments cannot be made till the next funding period begins.
There are situations when an employee might follow up for payments on an insurance claim. So, while a claim might get processed, payments will not be possible. has not been issued.
At times, employees wait for a particular state plan to make payment for the respective active and retired employees. This is due to a paucity of cash in the fund. The wait can take weeks or months on end. Self-funded plans are not bound by prompt payment guidelines as issued from state to state.
The Employee Retirement Income Security Act, or ERISA of 1974, states that a claim should be processed and usually paid within 45 days. If there is a paucity of cash in the fund, then there will be no payment.
Self-funded plans are not governed by any insurance laws that are governed by the state, and this includes prompt payment laws or a fee cap on non-covered services. These plans are not under the jurisdiction of any state insurance commissioner.
The conventional approach to enjoying dental benefits was fully insured plans. The company or the employer pays a fixed premium every month to the selected insurance company. In this arrangement, the insurance firm bears the financial responsibility for covering all dental claims. For a dental practice, the number of claims each year does not make a difference, and the cost paid toward the premium remains the same.
Such a model is easy to handle as it offers a predictable payout for the practice in terms of the total amount of premium every year. The model also provides extra services such as claims processing, customer service, compliance management, etc. However, when calculating the premium, one needs to consider the projected number of claims.
On the other hand, self-funded plans work differently. There is no upfront payment of a premium. The practice needs to pay for all dental claims submitted. The TPA of the insurance firm helps with all the administrative support needed to process claims, adhere to compliance norms, and manage the network.
The financial risk of fulfilling claims lies with the practice. Such models can provide flexibility in monthly costs and the potential for long-term savings. This model gives employers the ability to adapt plan designs by analyzing trends in claims submissions. The practice can then adjust plan designs to better cover the workforce. Self-funded plans are ideal for practices with a large employee base, multiple cities, or many branches. They can handle the impact of short-term losses while gaining better long-term control and savings.
The benefits of self-funded plans are that they can be customized, paired with a negotiated PPO network based on the practice’s requirements, and have no minimum participation requirements. Some of the benefits include:
Many patients are apprehensive about changing a dental practice when their current practice is out of network. Such a choice would make the employees forgo using their dental benefits altogether. When the practice opts for a self-funded plan, the staff gets the benefit of an open access dental network. A patient comfortable with a particular dental practice now has a choice in using dental benefits accordingly.
The premium collected for payment of dental claims in a self-funded plan is not lost if employees do not use the benefits that they are entitled to. Unlike a fully insured plan, the premium saved can be transferred and used in the following year.
A fully insured dental plan usually comes with a high premium. Many patients are not comfortable with paying a high premium. With a self-funded dental plan, one enjoys a lower premium, and the dental benefits are more appealing to employees.
Flexibility in self-funded plans provides dental practices with options in choosing plans and caps based on trends and current requirements. As time goes by and the requirements change, the plans can be modified accordingly. A practice can thus offer plans to employees that meet the requirements and help them in availing the benefits.
When employees are secure and assured that any dental care requirements are covered by a well-designed insurance plan, they are content and can focus on work without apprehensions. A self-funded dental plan lowers fears about going to a dental practice and about any benefits getting wasted.
Providing insurance to employees is offered by most organisations irrespective of size. While there are multiple choices of insurance plans available, many large companies are in favor of a self-funded dental plan.
Over a period of time, such a plan can offer benefits to the company, such as flexibility in the plan structure, reduced premium outgo, transfer of unused premium to the next year, and a choice of dental practices for the employee.
In a self-funded dental plan, one does not pay a premium to an insurance firm. The company deposits cash in a fund and pays for insurance claims as needed. It is not subject to state-mandated laws and offers long-term savings opportunities.
To know more, talk to Capline Dental or write to [info@caplinedentalservices.com](mailto:info@caplinedentalservices.com)
