Insurance Alternative
North Carolina Dental Society Direct Reimbursement Dental Plans
Direct Reimbursement Dental Plans are employer-funded, group dental plans that reimburse employees for a set amount of their dental-care expenses. Direct Reimbursement dental plans are strongly supported by the North Carolina Dental Society and the American Dental Association, and thousands of people across North Carolina are covered by these types of employer-provided plans.
Instead of paying monthly premiums to an insurance company, an employer sets aside funds to pay for anticipated employee dental care, up to an annual per-employee amount set by the employer. Employers have complete control over the benefits they offer, and the money paid out to reimburse employees for their dental care is fully tax-deductible for the employer. A direct Reimbursement Dental Plan can be created to fit any employer’s budget.
Traditional dental plans are often complicated, difficult to understand, and full of exclusions. A Direct Reimbursement Dental Plan, however, is simple for employees to use and easy for employers to administer. Direct Reimbursement Dental Plans allow companies to eliminate many of the costs typically associated with traditional dental insurance plans. There are no premiums, no premium taxes, no insurance company profits, no commissions, and no fees for use of dental networks. The money set aside by the employer goes directly to reimburse employees for dental care they actually receive, rather than to an insurance company. Direct Reimbursement Dental Plans work well because the cost of dental care is generally predictable and non-catastrophic, and because employees typically do not overuse dental benefits. According to the Health Care Financing Review and American Dental Association Survey Center calculations, just 65% of employees visit their dentist each year, and the average dental expenditure per person, per year, is approximately $246. With a Direct Reimbursement Dental plan, any funds in excess of the amount actually spent to reimburse employee dental costs stay with the employer.
Example: A company with five employees decides it can spend up to $1,000 a year to provide a dental benefit for its employees. Dividing the $1,000 annual budget across the five employees gives each employee up to $200 in reimbursable dental care for the year. The company decides whether the $200 will apply to each employee as an individual, or whether the $200 can be shared by the employee and his or her dependents. The employee goes to the dentist of their choice, pays the dentist for the treatment they receive, and brings a copy of their receipt back to the company. The company reimburses the employee for the amount of the receipt, up to the employee’s $200 annual maximum. Once the employee’s total reimbursements reach $200, the employee is responsible for all of their dental costs for the rest of the year. At the end of the year, if the company only spent $800 in employee reimbursements, rather than the $1,000 allocated, the unspent $200 would stay in the company’s account, and the $800 would be fully tax-deductible to the company as an employee benefit expense.
At a time when employers and employees are facing increased economic pressures, Direct Reimbursement Dental Plans give employers a simple, cost-effective, tax-deductible way to provide a highly desirable employee benefit — a win-win situation for everyone.
To look at establishing a Direct Reimbursement Dental Plan for your group, please contact Suellen Foust at the North Carolina Dental Society, (919) 677-1396.