Self-funded dental plans

[Guest cbrightwell]

Can a non-profit association offer a self-funded dental benefit plan to the association members? The members will pay 100% of the cost of the plan.

[KIP KRAUS]

Since you are probably not subject to state insurance law on a self-insured dental plan my guess is you can. However, the biggest concern with association plans is adverse selection. Those who know they will use the plan will join the plan. Unless you can make the premiums attractive to everyone, you will not get enough participation to make a plan worth while. If, for example, you figure the monthly premiums to be $29.00/mo. for single coverage and $50/mo. for family coverage, which is not unreasonable, who is going to join if all they know they will get reimbursed for is two cleanings per year? If the participants are going to pay 100% of the cost of the plan are you going to asses them at year end when there was not enough premium during the year to cover costs?

It’s generally not a good idea to provide insured or self-insured dental to an association unless you make participation mandatory for every member, and that isn’t very likely.

Lastly, if you insist on doing this plan, plan design is the key to any success, so get some professional advice.

[mroberts]

I agree with many of the points that Kip made. I was an underwriter for MetLife and worked on many voluntary (employee pay all) dental quotes. The problem is, if employees have to pay the full cost for dental, most people are not likely to sign up. Minimum participation is generally 25% on a voluntary dental plan and the 25% or so that signs up generally needs dental work. The bottom line was that the plans just really didn't work. Even if we quoted decent rated the first year, there was usually a sizable increase the second year because of adverse experience.

Many times with dental, unlike medical, employees can also wait to get a procedure done. Therefore, even if an employee found out he or she needed a root canal in July or August, it could most likely be put off until early January after open enrollment comes up.

I have constructed, qouted and implemented just about every kind of dental plan imaginable, so if you would like to discuss further, do not hesitate contacting me at matt.roberts@bbinsurance.com.

Take Care!