(Some information was obtained from the ADA Direct Reimbursement Brochure)
Editors note: We encourage you to check out the ADA web site available through our "Related Web Sites" page. They have a section devoted to Direct Reimbursement.
Direct Reimbursement is a self-funded dental benefit that you can offer
your employees that is similar to dental insurance, but is much less costly,
much simpler to use and has none of the restrictions that are normally
associated with typical dental insurance.
There are many ways that Direct Reimbursement is better than standard
dental insurance. The primary benefits are listed as follows:
It is very simple. Once your plan is set up and your benefit level
has been established, all that is necessary for your employees to begin
receiving the benefit is for them to see the dentist of their choice. The
employee and dentist decide what treatment, if any, is necessary; the treatment
is rendered by the dentist; the employee pays the dentist for the services
at the time of the visit and receives a receipt for the payment. The employee
then takes the receipt to the employer and the employer reimburses the
employee for all or part of the expense based on the benefit level and
plan design. It's that simple.
The American Association of Orthodontists and/or the American Dental
Association can prepare a first year projected cost estimate for you. Once
the plan is in place and as receipts come in, you can either pay the reimbursement
amounts directly out of your operating budget or set aside a certain amount
of money each month in a special trust account to deal with dental claims.
Since you will have a good idea of the projected costs ahead of time, the
decision is yours as to how to best handle the budgeting of funds.
Your attorney and bank can help you set up the trust account. If a
trust is adopted, then all funds are deposited irrevocably. A trust account
may be required if you are withholding a portion of an employees wages
to help pay for the benefit plan.
By virtue of the plan design, your employees do contribute to the plan
by paying their copayment amount. Remember that when the employee pays
for their treatment and is subsequently reimbursed for dental treatment
received, the amount of the reimbursement is for all or part of the treatment
cost, depending on the plan design. Your employees may ask you to withhold
funds from their payroll checks to help them create a reservoir of money
to pay for their share of the costs, simply because it is easier for them.
Whether or not you decide to offer that as part of the benefit is up to
you.
Although it is possible for this to occur, statistics have shown that
your actual costs should fall within the conservative estimate of projected
costs. The projected costs are based on the anticipated utilization rate
for your type of company and reflect a portion of the total benefit amount.
If you want to be extremely conservative in your budget preparation, you
can simply budget for the maximum benefit for each employee each year.
In that way, you know definitely that you will not spend more than you
have budgeted. It is a well known fact that dentistry is something that
is not overutilized.
Typically, your first year expenditures will be less than the projected
costs. However, the second year in the plan usually shows the highest costs,
but utilization tends to drop off and stabilize in subsequent years.
If you simply don't have the staff to administer the plan yourself,
you can employ a third party administrator to do the work for you, typically
at a nominal cost per employee per month or on a per claim basis. Several
firms are involved in this type of work, but the least expensive form of
Direct Reimbursement occurs when you administer the plan yourself. If you
elect to use a third party administrator, we can give you the names of
several businesses to contact.
No! In fact, depending on the size of your company, the plan can be
administered on paper quite easily. The benefits of a computer system become
self evident as the number of employees on a plan increases. New self-insurance
software is available from CounterPoint Software, Inc. in Anchorage, Alaska
at a cost of $995. The new software is compatible with computers that use
Windows 3.1, Windows NT and Windows 95 operating systems and capable of
tracking medical, dental, vision and chiropractic benefit plans, either
singularly or in any combination.
Yes, you can by simply following the instructions in the ADA brochure
entitled Direct Reimbursement. The ADA Council on Dental Care Programs,
the AAO and the Alliance for Dental Reimbursement Plans can help you design
your plan if you need assistance.
Yes, depending on how you plan to administer the benefits and the number
of employees covered. If you have 99 employees or less and the benefits
are paid out of working capital, then neither special forms or a certified
plan financial statement need be filed. If benefits are paid out of a trust
account, then you must file IRS Form 550C/R. If you have more than 99 employees
and benefits are paid out of working capital, then you must file IRS Form
5500. If benefits are paid out of a trust account then both an IRS Form
5500 and a certified plan financial statement must be filed. Your accountant
can assist you in filling out these forms.
In addition, a Summary Plan Document must be filed with the Department
of Labor and distributed to all covered employees. Both the filing and
distribution of this document must be done within 120 days following the
plan's effective date. The ADA or a representative from your local dental
society can help you prepare this document.
We encourage employees to pay for their treatment at the time of service,
but we recognize that may cause a financial burden for some people. Options
available to the employee are payment with a credit card. If the dentist
doesn't accept credit cards or the employee doesn't have a credit card,
then the employee should talk with the dentist to see if financial arrangements
can be made, ie. delaying payment until the reimbursement is made or getting
set up on a payment plan of some type. The intent of the Direct Reimbursement
program is to make employees direct consumers, to get them involved in
understanding the costs associated with dental care and to help them become
wise purchasers of dental services.
This generally isn't a problem because employees understand that they
only have a certain number of benefit dollars to work with each year and
the trend is that employees become wiser and more cautious when purchasing
dental care. However, if an employee feels that he/she has been overcharged,
your local dental society may have a peer review committee that will help
resolve disputes between the patient and the dentist. In most cases, the
services of the peer review committee are available to the public regardless
of the type of reimbursement plan being used.
No. Direct Reimbursement plans do not require second opinions, but
if the employee or the dentist would like to obtain a second opinion, there
certainly is no limitation within the plan to prevent such an occurence.
Likewise, predeterminations of benefits prior to receiving treatment are
not required in Direct Reimbursement plans since there are no limitations
placed on particular procedures or on the various types of treatment.
No. There is no coordination of benefits with Direct Reimbursement
plans, however, your dentist will most likely submit a secondary claim
for you if necessary. Such requests are usually handled between the employee
and their dentist.
Documented cases of fraud in dental benefits plans are extremely rare.
However, the cost sharing aspect of Direct Reimbursement plans is important
because it helps control abuse by both the employee and the dentist. If
you are especially concerned about the possibility of fraud, employees
may be made aware that spot verifications of claims may be made and that
falsified claims in which the employee is a participant may result in the
termination of the employee.
Yes the employer is responsible for claim review and/or denial, but
only to the extent of the financial part of the claim, not what treatment
was rendered. If an employee has reached the maximum benefit for the year,
then subsequent claims reviewed by the employer would be denied. The employer
should also review the claim to determine the employee's eligibility. Only
in the case of apparent fraud would an employer review a claim for the
type of treatment rendered. In such cases, the employer would want to be
closely involved since final resolution of the problem may result in the
termination of the employee.
The CounterPoint Software, Inc. e-mail address is:
info@counterpointsoftware.com