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Direct Reimbursement Dental Plan

Direct Reimbursement Dental Plan

Direct Reimbursement is an innovative approach to self-funding employee dental benefits. It is strongly supported by the North Carolina Dental Society and the American Dental Association as a cost-effective way to provide a dental plan for employees. Direct Reimbursement gives employees the freedom to choose their dentist. There are no networks with a DR plan. Direct Reimbursement is a self-funded dental benefits plan that reimburses employees for dental care expenses.

Since dental care costs are predictable and non-catastrophic, a DR plan is perfectly suited for dental expenses. Typically, insurance is needed to insure/ protect an individual from a significant loss. Dental is not this type of event; therefore a Direct Reimbursement dental plan is a good alternative to traditional insurance.

Each employer determines a reimbursement schedule for dental expenses incurred. The employee is then reimbursed according to this schedule from a fund established by the employer using employer and employee contributions.

Who is best suited to use a Direct Reimbursement plan?

An increasing number of both large and small employers across the nation have adopted Direct Reimbursement plans to assist their employees in meeting the costs of their dental care. Employers with as few as two employees to employers with as many as 10,000 employees are using a DR plan successfully.

Direct Reimbursement Dental Plan    

5 Simple Direct Reimbursement Steps

  1. An employee visits the dentist of his or her choice.
  2. Treatment is determined and care is provided.
  3. Employee is responsible for paying the dentist. Payment may be in the form of a credit card, personal check or cash. For an extraordinary expense, where up front payment would be a hardship, a payment arrangement can be worked out between the employee and the dentist.
  4. Employee submits a copy of the receipt to Interactive Medical Systems as proof of payment.
  5. Employee is reimbursed, according to the plan design.

Direct Reimbursement is easy to design

Employers can design the plan to meet their needs and budget. A typical plan may look like the following:

The patient is reimbursed:

  • 100% of the first $150 of dental expenses
  • 80% of the next $250 of dental expenses
  • 50% of the next $1,300 of dental expenses

for a $1,000 annual maximum.

A Direct Reimbursement Plan:

  • Has no deductibles
  • Has no complicated schedules based on procedures. With a DR plan, there are no such things as Preventive, Basic and Major services.
  • Has no exclusions (employers can choose to exclude orthodontic treatment and cosmetic procedures)
  • Direct Reimbursement is easy to communicate and to understand. Because of its simplicity, employers and employees alike are satisfied with the plan.

Direct Reimbursement is a win win situation for the employer, employee and dentist!

For the employer:

  • DR is not a traditional dental insurance plan. Since Direct Reimbursement is a self-funded dental plan, so neither the company nor the employee pays insurance premiums.
  • Typically save companies anywhere from ten to forty percent over other dental plans.
  • Reimbursement money is only spent when an employee visits the dentist. If employees donít visit the dentist, nothing is spent.
  • DR is flexible so that employers can design the plan to meet their needs and budget.
  • DR is easy for employers to communicate. Direct Reimbursement works without deductibles, waiting periods, and limitations or exclusions.
  • Employers have several options for administration. Because DR is so simple employers can either self-administer the plan or contract with a third-party administrator.
  • Fewer complaints about the dental plan.

For the employee:

  • DR is easy for the employee to understand. No complicated benefit booklet or claim forms.
  • The employee can visit the dentist of his or her choice thus preserving the patient/dentist relationship.
  • Since everything is covered under a DR plan, employees have peace of mind knowing that no matter what services are provided, they will be reimbursed based on the plan design.
  • Reimbursement is prompt.
  • Employee becomes a better consumer since typically they are responsible for paying the bill and then being reimbursed. Employees know how much they are spending for dental services and can make better educated decisions about their dental care.
  • There is no predetermination or preauthorization so employees can get the treatment they need when they need it. Employees do not have to wait for an insurance company to approve a pre-treatment plan.

For the dentist:

  • Freedom of choice Ė Maintains patient/dentist relationship.
  • Encourages fee-for-service dentistry.
  • Reduces paperwork and red tape in the office.
  • No complicated claim forms Ė Claim forms are not complicated and easy to complete for the employee and the dentist.
  • Allows dentist to determine treatment without the interference of a third-party.

Frequently Asked Questions

Q: How is Direct Reimbursement different from other dental plans?

A: With DR, benefits are based on the amount of dollars spent for dental care rather than on type of treatment received. Because this is how Direct Reimbursement works, it eliminates hassles about what is covered and what isnít. Furthermore unlike some dental plans, DR gives employees the freedom to choose any dentist for care, including their own dentist. Finally, because Direct Reimbursement eliminates the middleman, it is typically more cost-effective than other dental plans.

Q: How do I design a DR plan?

A: Interactive Medical systems has a designated Direct Reimbursement representative that will be happy to assist you and answer any questions you may have.

Q: I own a small business, will Direct Reimbursement work for my company?

A: Yes. In fact, here in North Carolina our biggest market segment are those employers with fewer than ten employees. Smaller employers like DR because it is easy to understand and simple to administer. Also, smaller employers like having the flexibility to design a plan that will meet the needs of their employees and maintain their budget. Furthermore, since there are no premiums, there are no renewals to negotiate at the end of each year.

Q: Direct Reimbursement sounds so great, why isnít everyone using it?

A: Chances are employers who are ideally suited for a DR plan do not use the concept because they have never heard of it before. In general, people fear what they donít know. Since most employers have not heard of Direct Reimbursement, they donít think it could work for them. Most employers who have heard of DR first learned about it from a colleague or dentist. Recently, the ADA has initiated a national advertising campaign and that has helped supplement advertising at the state level. It is hoped that this combination will make Direct Reimbursement more of a household name.

Q: If a company designs a plan for 100 individuals with an annual maximum of $1,500, will it actually spend $150,000?

A: This particular scenario is highly unlikely. While $150,000 is the maximum amount of exposure, it is not close to the actual experience of any Direct Reimbursement plan known to the ADA. Plans typically do not reach this level of exposure because it is estimated that only 60% of those with dental benefits actually use them in a given year. Of those who do visit the dentist, the average claim cost is less than $200 per year. Given those national averages, it is rare that a company would experience the maximum liability.

Q: My employees live from paycheck to paycheck and cannot always afford to pay for their dental treatment up front.

A: There are several ways to address this concern. Most dentists in North Carolina now accept credit cards. An employee can pay for his or her dental treatment with a credit card, turn in the receipt, and have the reimbursement check to pay the credit card bill when it arrives. If an employee needs major dental treatment, many dentists will spread the payments over the course of a year. This way employees can submit the monthly payments for reimbursement. Finally, in many instances a dentist will accept an assignment of benefits option where Interactive Medical Systems reimburses the dentist directly rather than the patient.