Coordinating dental coverage with the Affordable Care Act’s requirements poses some challenges for plan designers and sponsors.
Essential Health Benefits
The ACA requires all health plans sold on the individual and small group markets, both inside and outside of the Health Insurance Marketplace, to cover “essential health benefits.” This package of ten items and services must include pediatric oral care, or dental care for children are included in ACA’s ten Essential Health Benefits . This means medical plans for small groups and individuals must include benefits for oral health risk assessments and screenings and treatment for dental cavities (caries) with no cost-sharing.
But wait…although the exchanges must offer pediatric dental coverage, not all medical plans sold on the exchanges offer this coverage. The exchanges must offer standalone dental plans. It’s up to the individual consumers to buy this coverage if they need it.
The situation differs for small group plans sold off the exchanges. They must offer pediatric dental benefits, unless the insurer is “reasonably assured that an individual has obtained such coverage through an Exchange-certified stand-alone dental plan…”
Annual Dollar Limits
A typical standalone group dental plan might limit a plan member’s annual benefits to somewhere between $1,500 and $2,000 per year. The ACA changes that for individual and small group plans. Because pediatric dental benefits are considered one of the essential minimum benefits, a plan must cover them with no annual limits. This could increase the cost of covering children significantly.
If a medical plan includes dental benefits, how will the deductible apply? If your employees have coverage through a high-deductible health plan and the same deductible applies to dental benefits, high out-of-pocket costs could prevent many employees from using their dental benefits.
Medical Loss Ratios
The ACA’s medical loss ratio provision, or MLR, generally requires insurance companies to spend at least 80 percent of the money they take in on premiums on healthcare and quality improvement activities instead of administrative, overhead and marketing costs. If an insurer’s spending doesn’t meet this ratio, it must make premium rebates to policyholders. Also known as the 80/20 rule, the MLR provision ensures consumers get good value for their premiums.
The medical loss ratio requirement does not apply to standalone dental plans. However, some states (including California) have considered legislation that would require MLR standards to apply to dental plans offered on their health insurance exchanges. This could pose problems because dental plans often have lower loss ratios than medical plans. This happens because dental plans have the same sorts of administrative expenses (enrollment costs, marketing costs and claims-handling costs) as medical plans, but dental services typically cost less than medical services.
Considerations for Employers
Because the ACA spells out what type of preventive benefits a plan must cover, pediatric dental benefits under an exchange or small group plan might be more expensive than coverage under a standalone plan. Although it’s too early to tell exactly what effect the ACA will have on dental benefits, many fewer people have enrolled in dental coverage through the exchanges than expected.
The National Association of Dental Plans (NADP) estimates the cost of covering a child under a small group dental plan at about $21 per child per month without orthodontia benefits. Adding orthodontia benefits at 50 percent coinsurance (the insured pays half and the insurer pays half of covered charges) would increase plan costs by about $2.80 per month per child.
While the Affordable Care Act still has bugs to be worked out, it has made some difference in the availability of dental coverage. Many studies have shown the link between having dental insurance and obtaining regular dental care. To ensure your employees’ health and well-being, we offer a variety of dental plan designs to meet your needs and budget.