Brokers and advisers are huddling with their employer
clients to brace for the changes that will be brought on by the Patient
Protection and Affordable Care Act (PPACA). However, many may not be
aware of the impact this will have on dental benefits. Brokers educated
on the issue can distinguish themselves by offering the right solutions
for their clients.
As part of the act, a fee will be charged to all entities providing
health insurance to help subsidize care for nearly 30 million uninsured
Americans who are expected to be covered.
With an estimated $8 billion industry-wide bill due in 2014, divided
by the total premium of fully insured plans, every fully-insured plan
will be expected to pay the federal government about 1.5% of health
premiums, according to Tom McInteer, second vice president in the group
dental division for The Guardian Life Insurance Company of America. He
says that figure could double in later years as the assessment
But many may not realize that dental and vision plans in addition to
medical plans will be assessed with this fee. However, McInteer explains
that the fee does not apply to employers that offer self-funded
benefits. Therefore, a dental administrative services only (ASO) program
may be just what the doctor Ė or dentist Ė ordered to help
maintain the affordability of employer-provided dental benefits.
ASO plans, which have long been a solution for employers looking to
offer comprehensive, yet more affordable dental coverage, will become an
even more attractive alternative.
“The potential for the impact of this fee to be included in the
overall pricing of fully insured plans will give additional incentive
for employers to self-insure their dental plan in order to manage costs
while providing the right dental benefits,” McInteer states.
“It’s more important than ever for brokers and employers to
understand how they could benefit from an ASO arrangement and what to
look for when selecting a carrier.”
The ASO advantage
ASOs are an excellent vehicle for delivering dental benefits, whose
claims are fairly predictable and generally not catastrophic. This
self-insured arrangement enables plan sponsors to eliminate the premium
taxes and risk charges associated with fully insured dental, while also
offering quality benefits.
One key advantage of an ASO arrangement is that thereís
currently no state premium tax, which is equivalent to between 2% and 3%
of the premium. McInteer believes the PPACA fee, if included as an
overall health company expense, could double the incentive for employers
to self-fund their dental benefits with an ASO.
When selecting a carrier for an ASO dental plan, itís important
for an employer to feel confident that the plan will help them control
costs, since the risk is on them. One of the most important ways to do
this is with a strong network of dentists offering substantial
discounts. Guardian offers a broad provider network featuring more than
74,000 dentists in more than 161,000 locations nationwide with discounts
averaging 30%. Providing more access to discounted care can potentially
result in claims savings for both the employee and the employer.
Another key consideration for the plan sponsor is the extent to which
claims are processed quickly and efficiently. In the case of Guardian,
the average claims turnaround time is 2.5 days, while sophisticated
dental review logic detects unbundling, upcoding and incorrectly
submitted CDT codes resulting in a 99% accuracy rate.
A new approach to ASO
Where Guardian really distinguishes itself apart from others in this
market is by offering a creative yet simple alternative for producers
who may not be entirely comfortable recommending an ASO program for
groups that are reluctant to take on full risk.
An innovative hybrid option combines the best features of a fully
insured product, including 105% stop loss coverage, with a standard ASO
plan. Plan sponsors are billed for this maximum liability each month and
if claims exceed that amount, then Guardian will pay the difference,
adding a fixed-cost component to help budget for dental expenses.
McInteer considers the 105% stop loss coverage to be a rather
significant feature that’s rarely offered in the marketplace.
“We really believe the future of dental is in ASO,” he says.
While most dental carriers will offer plans “as an ASO
accommodation” when deemed necessary, he explains that Guardian is
actively trying to promote the concept as a smart choice for employers
that want to offer dental coverage.
“When I get in front of groups of brokers, they’re not
even aware of the fee on health insurers and how that could impact the
cost comparison between fully insured and ASO offerings,” he
reports. One possible reason is that health insurance trumps dental
coverage in terms of employee benefit priorities. “Dental is not
getting a lot of attention,” he adds. By understanding the
implications of PPACA and how ASO dental plans can really help employers
save, brokers can distinguish themselves and meet their client needs.
Learn more about another important impact that health care reform may
have on dental benefits. Visit NADPís Web site: www.keepourcoverage.org