Scaling Back?

In the dental insurance world, this type of plan is an anomaly. “It’s not very common to see 100% coverage. That may have been the case 10 or 15 years ago, but it isn’t today,” says Irene Klatt, vice-president, health insurance, with the Canadian Life and Health Insurance Association (CLHIA). And with employers expecting troubling times this year, industry insiders aren’t expecting this type of plan to make a comeback soon.

Shelley McKibbon, HR manager with Leon’s, confirms that the dental plan is a large expenditure for the company, but the furniture giant is proud that it can offer the plan— and that it has been able to do so for so long. “We have not made any changes to it in the 20 years I have been here,” she explains. “That’s a good thing. The way the cost of living has gone, a lot of companies are cutting back, making higher deductibles— they are taking things off the plate. Leon’s has been able to maintain its plan from day one. We can’t improve it, but we are not taking away.” With any luck, other employers will be singing the same tune in 2009 as they look for innovative ways to take a bite out of their ever-escalating costs.

Bracing for Cost Increases

As employers head into 2009, many are working with smaller budgets. But according to those in the know in the dental industry, employers aren’t looking to cut back on dental benefits—at least, not yet. Scott Heard, vice-president, sales and marketing, group insurance, with Industrial Alliance, says, “From my experience with other challenging economic times, the instinct for many plan sponsors is to start cutting back.

But the challenge is that you have a very insecure workforce in those conditions, and benefit cutbacks may fuel that insecurity. Progressive employers that are more optimistic will secure their benefits program. They may consider other cost-reduction opportunities before benefit cutbacks. The benefits program tends to get protected.”

Benefits are important to employees, and smart employers recognize this. According to a recent consumer poll commissioned by the Delta Dental Plans Association, 50% of respondents view dental benefits as a “very important” part of the benefits package. However, in tough times, Klatt says employers sometimes need to make tough decisions. “In times of difficulty, [for example] going back to the early 1990s, you tended to see employers say, ‘Well, I am trying to keep everyone working, so I might have to make some reductions in my benefits.’ You’d rather keep everyone working than not.”

Steve Moffatt, vice-president, sales and marketing, with Green Shield Canada, adds, “I haven’t heard a lot of people talking about reducing or eliminating dental benefits. People are concerned about the year coming up, but the tone seems to be, How can I better manage my costs without changing my plan design?”

Moffatt suggests that employers start with some simple housekeeping items, such as ensuring that the coordination of benefits for plan members is up to date and asking their carriers about preferred provider options. “Some carriers may have dental networks available where plan members can get dental services at a preferred price,” he says. For example, now that dental hygienists are able to practise autonomously in Nova Scotia, Ontario, Manitoba, Saskatchewan, Alberta and British Columbia, they are able to provide services in a wider range of locations as opposed to only in dental offices. And their rates are based on their own fee schedules, as opposed to those of the dentists, which could result in cost savings. “These things, preferred providers and coordination of benefits, are so basic that some people overlook them,” Moffatt says.

Adding yearly deductibles of $25 to $50 or dollar limits on services and lab fees, as well as using a one- or two-year lag with fee guides, are common cost-saving or cost-shifting elements that employers can incorporate into their dental plans. These strategies can lower costs without making massive plan design changes. Implementing deductibles of $25 a year for single coverage and $50 a year for family and using a two-year lag on fee guides are some of the ways that Leon’s helps control the cost of its plan. By doing so, the company transfers some of the cost to its employees with very little impact. “The difference isn’t that bad—we are talking a difference of $5 or $10,” explains McKibbon.

However, before plan sponsors start blindly tweaking their plans, Moffatt suggests that they consult their plan advisors. “It’s not a bad idea to go back and look at your plan design and ask, ‘Is it accomplishing what I want it to?’ The plan advisor will be able to contribute some analysis of where the spending is happening, to give employers the opportunity to make an informed decision if they are thinking about making a plan design change.”