Coverage Decay
According to the CLHIA, 54% of Canadian employers offer dental coverage. While each plan is different, the most common type of coverage is 80% basic and 50% major (which would include crowns, bridgework, dentures, et cetera). Additionally, most industry experts agree that the average yearly maximum on plans is approximately $1,500. Although Moffatt and Heard say they don’t expect their clients to cut back on benefits this year, Bill Hollingshead, dentist and chair of the practice management committee with the Alberta Dental Association and College, argues that employers have been indirectly cutting back for years.
“When I graduated in 1977, the annual benefit maximum was $1,500 per person, per year. For many [plans], this hasn’t changed in over 30 years,” he says. “From 1997 to the spring of 2008, dental fees in Alberta have gone up, on average, 43%. That’s about 1.4% a year. When you think about it, if the fees have gone up and the maximums have stayed the same, there has been a reduction in coverage.” Hollingshead says those provincial numbers are pretty consistent with what’s been happening across the country.
The issue of plan maximums is a challenge that dentists meet on a regular basis—and one that boils down to more than just money. “Some people think if their dental plan doesn’t cover it, they don’t need it,” says Hollingshead. However, he adds that patients are starting to realize that isn’t the case.
Although most people don’t use their entire yearly dental allowance, if a patient needs wisdom teeth extracted or a root canal, a couple of fillings and a regular cleaning, it is easy to spend $1,500. When people have maxed out their plans or certain procedures aren’t covered, they will often opt for a cheaper alternative. “I’ve extracted teeth that I really didn’t want to,” admits Hollingshead, adding that sometimes that’s the less expensive route that the patient wants to take. But if it does come down to the simple issue of money, Hollingshead says that he, like most dentists, is flexible. “Every day I do something for free, and I think most dentists would say the same. People come in and they have no coverage. We are professionals. We are not going to charge our usual and customary fee if people don’t have the money to pay for it. We are in a kind and caring profession, and we try to provide our patients with the best service we can.”
The real question is, Why don’t more employers adjust their coverage levels to reflect inflation rates? One speculation is that since plan members don’t typically use all of their yearly coverage, plan sponsors don’t see the need to increase it. Another thought is that dental plans are getting lost in the wellness culture. As service providers and organizations focus on new wellness programs and initiatives, dental benefits are sometimes forgotten. “Dental is flying under the radar. It is subject to cost increases but not to the same extent as health,” says Heard. “Dental used to be the single most costly component of benefits plans but not anymore. The cost of health benefits has surpassed dental and, [in some cases], by a fair margin.”
While not keeping up with inflation may be an indirect way to contain costs, Hollingshead says he’s seen employers directly cut back in other areas—for example, limiting recall exams to once every nine months rather than twice a year and limiting fluoride treatment for adults. These types of cutbacks can have a negative effect on maintaining good oral health, which can be much more costly in the long run. Furthermore, according to the Canadian Dental Association, research has shown that there are links between poor oral health and other health problems that can cause employees to be absent from work for extended periods of time.
Retaining Flexibility
There has been little change in dental plan design in the past decade, but the growing popularity of healthcare spending accounts (HCSAs) and flexible benefits plans provides some relief to those who need the extra dental coverage.
Although flexible benefits plans can vary significantly from company to company, most are structured in tiers that allow employees to choose the level of coverage that best suits their current situation. For example, Ceridian, an HR solutions firm, gives its employees five different options for dental coverage. Employees can choose from putting their flex dollars into an HCSA to cover dental or health expenses, to opting for the top tier that has 100% coverage of basic services, 60% for major services with a $2,000 limit and 60% coverage for orthodontics with no age limits. Reg Kehler, manager of benefits with Ceridian, says the latter is the “Cadillac plan.” With this option, employees have to make some contributions to the overall plan costs, whereas with some of the other options, they don’t. Kehler also confirms that for the past six years, the flex dollars that employees have been given have increased by 2.5% to 3.1% to keep up with inflation. So, while the maximums on each of the options may not increase, employees have extra flex dollars in their HCSAs to help with excess costs.
However, Heard explains this isn’t always the case at organizations that offer HCSAs. “Spending accounts are most commonly offered as a complement to existing health and dental benefits. Some plan sponsors derive a portion of their funding for spending accounts from cutbacks to insured health and dental plans. [For example], the reimbursement level under an insured dental benefit might be reduced from 100% to 80% and the premium saving that results from this cutback is used to partially fund the spending account.”
Moffatt adds that there have even been some rumblings that employers are going to start leaning toward HCSAs to help with employee dental coverage instead of offering dental benefits. He says that none of Green Shield’s large clients have gone this way but that he has seen it with a few groups at the small-employer level. Mike Hamilton, a financial advisor with Capcorp Financial, has seen this trend start to emerge as well. “With smaller companies, usually from one to 10 employees, I am beginning to notice that it is more common to exclude dental under a group plan and put through the expenses in an HCSA.” Moffatt adds, “There isn’t an overwhelming trend toward it, but a lot of people talk about it as an option.”
While 2009 won’t be the year that dental plans are reinvented or undergo significant change, the experts believe that dental benefits are safe from cutbacks. “It’s tough to cut benefits. Employees go bananas when employers take something away,” says Hamilton. Hopefully, employers have brushed up on how important dental plans are to their employees—and to their health—and will look for other ways to fill the monetary gaps.
April Scott-Clarke is assistant editor of Benefits Canada.
april.scott-clarke@rci.rogers.com
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© Copyright 2009 Rogers Publishing Ltd. This article first appeared in the February 2009 edition of BENEFITS CANADA magazine.