Benefits of Self-Funded Dental Plans
Employers should provide dental insurance to their employees in order to help them receive dental treatment. Fully insured dental plans provide predictable premiums for employers, but insurance companies could raise them (Wilmerding 2016). Employers who want to save money should consider self-funded dental insurance.
Self-funded dental insurance could help save businesses money. According to Liisa Granfors-Hunt, “director of account management for the Corporate Synergies Bethesda, Md., regional office,” “When insurance companies price products, they determine the premium by reviewing actuarial data, setting aside a portion to pay current claims, reserves to pay future claims, plus a profit. Why let the insurance company hold your reserves? By self-funding, employers hold that money” (Granfors-Hunt 2018). Self-funded plans still have annual limits of “$1,000 or $2,000 per year per employee” like other dental insurance policies (Wilmerding 2016). Employers could allow employees to go to any dentist or have a network of dentists for employees to go to in their self-funded plan (Roberts 2011; Wilmerding 2016). The business also has to fulfill roles that dental insurance companies usually do (Wilmerding 2016). For instance, Chris Wilmerding, “Principal of Thayer Partners,” states that “[the employer hires] a third party administrator to handle benefits administration, compliance, and plan design—the role usually paid by the dental insurance company” (2016). Instead of the insurance company providing coverage, “the employer pays only for eligible claims that are incurred” (Wilmerding 2016). In addition to these responsibilities, employers have more choice in that they “can tailor the plan to fit their employees’ specific needs, no matter the company size” (Roberts 2011). Businesses could benefit from self-funded dental plans because “[they]… offer employers more control, claims transparency (the administrators bill will list all of the claims paid out in a de-identified format), and significant annual savings nearly every year” (Wilmerding 2016). Since employers only pay for claims sent to them, they save their money in years in which employees do not send many claims to them (Wilmerding 2016). If employers encounter a year in which employees send many claims to them, then employers would “pay more than fully insured rates” (Wilmerding 2016). Fortunately, the annual caps would prevent the expenses from going too high (Wilmerding 2016). Additionally, employers save money by “[avoiding] the cost of claim reserves” and “[eliminating] the insurance company’s administrative costs, profit margin, risk charges, premium taxes and contingencies, which are added to the cost of expected claims in the insured premium” (Roberts 2011). However, Mark Roberts, “a licensed life and health agent based in the US,” says, “[self-funding dental plans] is not recommended for companies with less than 50 employees” (2011).
Employers could benefit from self-funded dental insurance plans. They have to take on some of the responsibilities of insurance companies, but they could save money, assuming that employees do not send many claims in a year.