1. What size companies should use direct reimbursement?

Any size company can save money from direct reimbursement. All companies (regardless of size) benefit because any money not used in any given year, stays in your account, (which you control, and can earn interest.) The average monthly reimbursement for care is much lower than if premiums were paid.

All companies will benefit from the ease and simplicity of understanding direct reimbursement. Direct reimbursement has the lowest over-head of all dental and medical (HRA) plans.

From every aspect, direct reimbursement is a more affordable option versus traditional insurance coverage for your employees.

2. How do companies benefit from self-funded dental benefits?

Traditionally dental plans have unfortunately been lumped in with medical plans. While they seem similar; they are very different. Medical benefit costs are not predictable, can be catastrophic, high risk and high cost. Dental benefits on the other hand are very predictable, non-catastrophic, low cost and very low risk. Treating the two plans the same costs companies money, as you are paying for insurance on something that has no risk. Using a medical (HRA) you can lower your premium costs significantly with very low risk. 

3. Why are dental benefits predictable?

With dental and medical (HRA) plans, you set an annual maximum and therefore have less exposure to risk. Additionally, patients do not over use dental benefits. Patients as a rule, are reluctant to visit the dentist. They will go for prevention, but not treatment. Studies show that 40% of all people with dental benefits will not ever use it. Of the 60% that do use their dental benefits, only 5% will hit their maximum amount.

One study by the Alliance for Dental Reimbursement Plans shows the average dental costs were $168 a year (per individual), and $300 a year including dependents. 

4. What makes direct reimbursement successful?

To save the most amount of money with direct reimbursement, your company needs a high employee participation. Under 70% participation of employees, can lead to adverse selection. (Insurance companies lower their costs by spreading the risk over higher number of insured people.)

5. Why is a custom plan, better and simpler?

A custom plan gives you a plan that meets your budget. Insurance companies set up dental plans in accordance with how they want to make money. Insurance companies understand that dental plans represent low risk and provide a very profitable opportunity for them. This is the only plan that simply allows you to determine the plan and only pay for benefits received, which lowers your overall benefit costs.

A custom plan allows you to decide what fits your budget. We will help design your plan. Direct reimbursement gives you freedom of choice. With the independent nature of Americans today, this is a critical feature.

6. Will direct reimbursement allow employees to choose their own dentists?

Direct reimbursement has the best network of providers, because it includes all dentists and all physicians.

7. How does direct reimbursement save a company large amounts of money?

The main reason direct reimbursement is becoming the fastest growing option for providing health care benefits, is because of the large amounts of money it is saving companies.

With direct reimbursement you only pay for actual treatment received instead of paying for monthly insurance premiums that employees don't always use. There are certain sectors of the health care industry (dental, HRA, vision, hearing) where self-funding is the best option, because of the maximum amount of money allocated for that benefit is relatively low. If that money is not spent for the year, your company keeps the money (and interest earned) to use for next year's benefit.

Although expenses for direct reimbursement plans may vary from month to month, you may request a cost estimate based on an actuarial formula that will help predict long-term costs. Direct Reimbursement Administrative Services, Ltd., can estimate your expenses upon request, at no cost to you.

8. If I design a dental plan for 50 individuals with an annual maximum of $1,000.00 will I spend the full $50,000.00?

It is very doubtful that you would spend that amount of money for several reasons:

• Approximately 40% of all people with dental benefits do not receive dental treatment in a given year. Of those who do receive treatment, most incur dental costs of less than $200.00 a year. Once the treatment is complete, the costs are minimal for continuing prevention.
• We can provide stop-loss insurance to cover the risk of excessive claims if desired.
• Many options on plan designs which correspond to the benefit desired are available. A company can raise or lower their costs directly by choosing a different maximum.
• Ongoing reports are provided by DRAS, Ltd., to evaluate your plans.
• We are readily available for consultation and answering your needs.
• 70% of employees incur annual expenses under $100/yr.
• Only 5% of claims reach annual expenses of $1000 (maximum can be limited).

DR Administrative Services, Inc.
20 Broadhollow Road, Suite 3007
Melville, NY 11747

631-629-4110
1-888-791-DRDP (3737) (toll free number)
631 629-4111 (fax)
1-888-791-1313 (toll free fax)
robr@dradmin.com