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The cost of medical coverage continues putting the squeeze on other benefits. Employees haven't altered their expectations by much, and they still want dental benefits. What's a human resource manager to do? With a bit of creative programming, there are several ways benefits managers can keep dental in the benefits mix.
One option is to maintain the existing dental-benefits program. The case for doing so is sound. Annual increases in dental premiums have remained pretty consistent. According to a report issued by Mercer Oliver Wyman Actuarial Consulting, increases in dental premiums remain in the mid-single digits, averaging 5.7 percent for dental HMOs, 7.0 percent for dental PPOs and 7.5 percent for group dental indemnity plans in 2003.
Normally, these increases might not seem significant. But when times are tight, some companies need to look at every opportunity for cost savings.
A single piece of advice: Don't mess with preventive care. One reason dental-benefit costs are less volatile than medical-benefit costs is that they emphasize preventive care. Cleanings and checkups take less time and money than restorative or emergency procedures. Plus, the cost for such treatments can be reduced significantly when employees use their benefits in this manner. A study published in Public Health Reports states that preventive dental care, early detection and proper treatment save the U.S. $4 billion annually.
One strategy to balance and stabilize dental benefits costs - and provide a financial incentive to seek preventive dental care - is to increase employee deductibles or co-pays for non-preventive treatment while continuing to cover 100 percent, or the highest possible percentage, of preventive treatment.
In today's environment some companies can make up ground by changing their level of managed dental care - going from an indemnity plan to a PPO, for instance. There is a tradeoff in that some employees might have to find new dentists, but it's a move that might be worth the cost savings.
Dental health maintenance organizations (DHMOs) offer the highest level of managed care and tend to be the least expensive options. Though less popular with employees than more open programs, DHMOs are an acceptable option for companies that want to offer a dental benefit but have to be fairly aggressive in controlling costs.
To maintain or even add dental benefits in lean times, companies might fund a low-cost benefit and ask employees who want more expensive coverage to pay the difference. A company offering DHMO coverage, for example, can offer employees a buy-up option so that they can pay up to the level of a PPO or indemnity plan.
Companies can totally eliminate their dental-plan costs by switching to a voluntary plan in which employees pay all premium costs. Some companies offering voluntary dental benefits have been surprised by how many employees participate - another indication of how sought-after is dental coverage.
Another consideration is the role dental can play in the composition of the overall benefits package. Could maintaining or even reinforcing dental benefits mitigate the effect of shifting higher medical costs onto employees?
In cases where companies must pass benefit-cost increases directly on to employees by increasing employee contributions, they might consider raising their plans' maximum available benefits. Raising plan maximums is a tactic that is regarded favorably by employees and doesn't necessarily result in significant additional cost for companies. This could be a good way to balance cost increases with employee satisfaction.
While it looks as though the worst might be behind us, it's always good to consider the options for keeping dental benefits in the compensation package, especially when these benefits are increasingly popular among employees and increasingly important in helping them to preserve their health.
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