Focus on facts
What are dental benefits?
Dental benefits provide financial assistance with some, or all, of the costs of seeing a dentist. Benefits can be delivered through a dental insurance scheme of which there are two types available. One gives cover limits for broad areas such as routine examinations, hygiene treatments and restorative treatment, while the other, cheaper option puts limits on each type of treatment, for example root canal treatment, fillings, crowns and X-rays. Some
insurance schemes can also include an element of co-insurance.
Dental benefits can also be accessed through a health cash plan. Dental benefits can also be an option on some corporate private medical insurance schemes.
What are the origins of dental benefits?
In the corporate arena, dental insurance schemes first became available about 15 years ago, after spending a decade in the individual market in the UK. Dental benefits have been available for longer through cash plans, which predate the National Health Service (NHS).
Where can employers get more information and advice about dental benefits?
There is no independent body that can provide details of all the providers, but employers can get more information from an employee benefits consultant or healthcare intermediary. Employee benefits consultants can be found through word of mouth or here.
Healthcare specialists can be found through the Association of Medical Insurance Intermediaries.
Nuts and bolts
What are the costs involved?
Dental insurance schemes start from around £5 a month for menu-based products, with more comprehensive schemes starting at about £10 a month. Alternatively, dental benefits can be bought through a health cash plan for as little as £1 a week. Premiums tend to be fairly static. On cash plans, it is not unusual for these to stay the
same for at least 10 years, while, with dental inflation at around 3% and competition rife, there is little movement on the insurance schemes either.
Any legal implications?
There are no legal implications.
What are the tax issues?
Whether employers buy dental benefits through an insurance scheme or a cash plan, they are treated like other employer-paid plans and are subject to tax and NI as benefits in kind (BIK). With low-cost cash plans, some employers have tried to argue that because they include duty-ofcare benefits, and the premium is so negligible it
could be ignored for BIK tax purposes.
What is the annual spend on dental benefits?
According to Laing and Buisson, the annual spend for 2009/10 was £5.7 billion.
Which dental providers have the biggest market share?
The three providers regarded as having the largest market shares are Bupa, Cigna and Denplan. Others include Dencover, Munroe Sutton and National Dental Plan. In the cash plan market, Simplyhealth is the largest provider, with Westfield Health in second place.
Which providers increased their share the most over the past year?
Again, it is difficult to know who has been building business the fastest, but while dental providers indicated they had all seen steady growth, there is anecdotal evidence cash plan providers may be taking some of their business.
The rising cost of dental treatment has made dental benefits popular with employees, and these can be in the form of insurance schemes or cash plans, explains Sam Barrett
Although access to NHS dentistry is improving, a trip to the dentist can be prohibitively expensive. Dental benefits can take away some of this financial pain and, with most of us required to visit the dentist at least once a year, it is an employee benefit that is well used and highly appreciated.
Pam Whelan, corporate sales manager at Denplan, says: “We find that once dental benefits are in place, they do not get taken away. Whether they are company-paid or voluntary benefits, employees really like the reassurance that they can visit the dentist without worrying about the bill.”
Two forms of dental benefit exist: insurance schemes and cash plans. Also, some menu-based private medical insurance (PMI) schemes include dental benefits as an option. However, Mike Izzard, managing director of Premier Choice Group, is not a fan of adding dental to a PMI scheme. “It is not good value for money this way and I do not think it fits on this type of insurance scheme,” he says.
Whichever type of dental benefit employers choose, the mechanics are fairly simple. Employees can use any dentist they like, NHS or private, and providing the work is covered, they can submit a claim to the provider.
Although the model is simple, there is plenty of competition in the market, says Amy Osmond, senior employee benefits consultant at Lorica. “It is a good time to shop around. A couple of clients switched from the big-name providers recently. They had been with them for several years but they were able to find cheaper deals with more benefits elsewhere.”
This focus on price has not escaped the providers either, with many looking at ways to bring the price down and better compete. A good example is Denplan’s launch of its Lucent range this year. This is more restrictive than its previous products, splitting the total dental benefit across different treatment types rather than offering one benefits pot to pick up any claims.
Another way to keep premiums keen is through co-insurance. This is the case with Simplyhealth’s and Cigna’s dental insurance products. Kirsty Jagielko, head of product management at Cigna Healthcare Benefits, says: “We offer a comprehensive insurance scheme but also a co-insurance scheme for employers looking for a lower-cost option. This gives 100% cover for preventative work, such as check-ups, but only 80% for treatment subject to the plan limits.”
Some providers are also gearing up for increased competition by beefing up their dental insurance offering. This is the case at WPA, where Charlie MacEwan, corporate communications director, says: “We have added a free employee assistance programme (EAP) to our dental scheme to give employers added value. Also, until the end of the year, we are offering a year’s free dental insurance to our corporate-paid medical insurance clients.”
Dental insurance providers also face more competition from health cash plan providers. Osmond says one employer client switched from dental insurance to a cash plan. “The union representative asked staff whether they wanted the existing dental scheme and the overwhelming response was that they were not bothered about keeping it and would prefer a cash plan instead. Employees like the extra benefits. The company went from 70% of staff with dental insurance to 100% with a cash plan.”
The extra benefits available on a cash plan add appeal. Alongside dental, employees can obtain optical and physiotherapy benefits and many plans also include EAPs, as well as money towards consultations and diagnostics. James Glover, sales and marketing director employers at Simplyhealth, says: “Dental is one of the most popular benefits on a cash plan, accounting for around 60% of claims, but we are seeing a lot of demand for the other benefits, too. People like the consultation benefit, which gives £500 a year towards consultations and scans.”
Plumping for a cash plan means employers also get the benefit of cheaper premiums. While premiums start from as little as £5 a month on dental insurance, cash plans can be £1 a week or less. “Pound for pound, cash plans offer more dental benefit,” says Glover.
Simplyhealth offers both types. Its lowest-level insurance scheme costs £7 a month and enables staff to claim back up to £30 for maintenance, 75% of any treatment subject to a maximum of £200 a year, plus £10,000 of accident cover and £4,000 for mouth cancer. Its £1-a-week cash plan gives £60 of dental benefit, which can be spent on any treatment.
But because of the other benefits they offer, cash plans do not provide as much dental cover as may be available through an insurance plan.
Izzard would like to see cash plan providers address this. “The dental benefit on cash plans is inadequate and we have plenty of corporate clients that have a cash plan and a dental insurance scheme,” he says. “I would like to see cash plan providers introduce an option to increase dental cover to £1,000 a year.”
As well as keeping an eye on their competitors, dental benefit providers are also watching what is happening in NHS dentistry. Glover adds: “The way dentists are remunerated changed in 2006, but the government is already reviewing this arrangement. This could make a difference to the availability and cost of dental treatment, so we are keeping an eye on this and will adapt plans and benefits levels where necessary.”
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