Dental Benefit Pricing Basics
Dental benefit pricing is based upon a few key inputs including plan design, dentist network, healthcare expense trends, group characteristics, funding mechanisms, and administrative expenses. By understanding the factors affecting price, you can more effectively compare proposals.
Benefit elements such as coinsurance levels, copayment amounts, maximums, deductibles, waiting periods, limitations, and exclusions are all levers used to control price. Generally, the more the plan covers, the higher the premium rate.
The type of a dentist network - traditional fee-for-service, PPO or HMO - can cause premiums to vary due to the contracted dentist fee agreements and how they impact claims costs. How are network dentists reimbursed? What coverage is offered when patients attend non-network dentists?
Dental Expense Trends
Most carriers look at annual dental fee trends to determine to what extent professional fees are increasing. Trend percentages between carriers will vary due to the type of network used and established fee monitoring and control.
An insurance carrier’s underwriter reviews many aspects of the prospective client in developing premium rates. This includes industry type, company locations, previous claims history and number of employees.
The ratio of employer to employee contribution affects the premium. An employee’s share of contributions to the premium cost can affect enrollment and may also affect the utilization patterns. Carriers quoting a dual choice option (between a PPO and DHMO, for example) must also estimate the number of employees that will sign up for each option. These assumptions may vary among carriers possibly causing changes in premium.
The cost of a plan is determined not only by claims costs but also by administrative expenses. The level of services offered may impact the overall premium rates. Some carriers reduce their administrative rates by not offering a wide array of cost and quality controls or professional oversight.