In the past we have discussed how rates and renewals are calculated. Here, we will reveal the mysteries of determining dental rates each year.
Dental benefits encompass a wide range of services and procedures ranging from simple check-ups and cleanings to major restorative procedures such as caps, crowns and even orthodontics. Depending on the plan design, most claims lie in the basic end of the spectrum such as check-ups and fillings. Plans can be limited to basic services including endodontic/periodontic services. More comprehensive plans are optional depending upon how generous the employer’s offering is.
Dental benefits pose less of a risk of running out of control than health care benefits. There are no high-cost and unpredictable services lurking and plans, for the most part, have annual maximums that generally don’t exceed $2,000. Even when optional benefits are included such as Major Restorative, the maximum is kept as a combined maximum. Orthodontic claims are normally spread out over multiple years and a per-person overall maximum is normally applied.
Not unlike health benefits, the renewal process includes reviewing general market usage trends as well as client-specific claims vs. premium paid over the previous period. The underwriters then determine whether the rates generate enough premiums going forward to cover anticipated claims. If the ratio of claims/premiums is low, they may reduce rates and the reverse is true if the ratio is high, indicating that more premium could be required. However, unlike health rates, there is another factor that is calculated into the dental rates, which is the dental fee guide.
Provincial Dental Fee Guides
Every year, the dental associations in each province release renewed dental fee guides. These guides dictate, by procedure, what fees dentists should be charging their patients. While fees vary from province to province, they inevitably increase each year and, generally, do so in excess of inflation. This year, for example, Ontario dental fees are 4.5% more than the previous period.
Dental renewal rates are based on:
- Claims made by plan members and their dependents vs how much premium was paid over the previous period
- Anticipated overall market trends
- Dental fees as determined by the provincial dental association
The exception to the process is for orthodontic coverage. Underwriters want to be certain that there will be enough premium to cover claims of a known amount per eligible dependent (anywhere from $1,000 to $5,000 depending on plan design). This has less to do with fees and, like vision care or travel coverage; an insurer may even have standardized orthodontic rates across their block of business. However, an organization with a high volume of orthodontic claims will most likely experience a rate increase.
ASSOCIUM Benefits is a very unique employee group benefits provider, focused on supporting benefits Advisors and their employer clients. We provide Brokers and Plan Sponsors with a range of solutions from traditional group benefits to more customized, cost and tax effective employee compensation. Let’s connect to find out how we can help.