The Affordable Care Act’s inclusion of pediatric dental coverage as an essential health benefit has small employers facing a dilemma: Whether to embed dental coverage within a medical plan or offer dental benefits as a stand-alone plan. Market confusion about what these plan options include and exactly what the health reform law requires highlights the need for expert benefit adviser help.

The ACA requires non-grandfathered health plans in the individual and small group market to cover 10 categories of essential health benefits (EHBs), which include pediatric vision and dental care. Yet, while most of the essential health benefits are easily embedded within a medical benefit plan, dental coverage has typically been offered by employers as a standalone plan.

Prior to the ACA, more than 98% of Americans with dental insurance were covered under standalone dental plans, according to the National Association of Dental Plans.

Recognizing the tradition of standalone dental coverage, the ACA allows for health plans on the exchange to omit pediatric dental coverage so long as a standalone dental plan offering pediatric coverage is available for purchase on that exchange.

In the final language of the ACA, that rule, however, did not get applied to plans outside of the exchange, as it may have been intended to, creating “terrible market confusion in the off-exchange environment where the majority of small groups continue to buy their plans,” says Christopher Pyle, vice president of marketing and government relations for Delta Dental of Virginia.

Regulatory guidance in the form of an FAQ issued by the Department of Health and Human Services attempted to clear up the confusion, but some say it only exacerbated the market confusion. That’s because the off-exchange guidance differs in a crucial way from the on-exchange guidance in that health plans on the exchange can exclude pediatric dental coverage if pediatric dental coverage is available to an individual, whether or not they purchase it. Off the exchange, the HHS guidance suggests pediatric dental coverage can only be excluded from a medical plan when offered to individuals if the plan can be “reasonably assured” that they have purchased coverage through an exchange-certified standalone dental plan.

Not surprisingly, the term “reasonably assured” is nowhere defined and the interpretation of the HHS guidance is not considered the same from one state to the next, further aggravating small group employer confusion.

Some states (Iowa, Arkansas, New Mexico and a few others) have addressed this either through regulation or, in the case of Virginia, through legislation (HB33/SB484). The regulatory/legislative fix in these states says that health plans do not have to embed pediatric dental into their plans so long as 1) a qualified dental plan is available for purchase and 2) the health plan discloses that its plan does not include the pediatric dental benefit. 

The legislative/regulatory fix is possible since state insurance departments have the jurisdiction to enforce the “reasonable assurance” rule.

In Kentucky, insurers are allowed to propose the method they intend to use to meet “reasonably assured” standard.

Further confusing small employers, Pyle says, “Multi-line carriers appear to be using health care reform to suggest that small groups have to embed pediatric dental in their health plan. But in some states like Virginia, that is absolutely false.”

Calls to several multi-line carriers were not returned at press time.

Small group employers more than ever need benefit brokers to help evaluate what dental benefit plans are available, Pyle says, because certain plan intricacies mean an embedded plan is “drastically different” than a stand-alone plan or even a dental plan bundled with a medical plan.

The plans

Since the roll-out of the ACA, children’s dental benefits now include three types of arrangements: embedded, bundled and stand-alone. Because the state regulates insurance coverage, what these plans include varies from one state to the next, but the essential concept of each plan remains the same.

Embedded

Embedded pediatric dental benefits are included (embedded) in the medical policy. The dental coverage is administered by the medical insurance carrier.

  • A single deductible may apply to both dental and medical benefits together.
  • Likewise, a single combined out-of-pocket maximum may also apply. Once the out-of-pocket maximum is reached, the combined dental/medical policy provides 100% coverage for all additional covered services.

Bundled

Bundled dental and medical coverages are sold together, but as two separate policies. The dental coverage could be administered by the medical insurance carrier or by a separate, stand-alone dental carrier.

  • Bundled dental coverage qualifies for separate deductibles and out-of-pocket maximums that are not affected by the medical coverage.
  • There are no annual benefit maximums, but a separate out-of-pocket maximum of $700 to $1,000 (depending on the state) will determine when the policy begins to pay 100% of covered in-network services.

Stand-alone

Standalone dental coverage is offered as a separate policy from medical insurance coverage. The coverage is administered by a separate, stand-alone dental carrier.

  • Standalone dental insurance has limited deductible and out-of-pocket maximums completely separate from medical coverage.
  •  Standalone coverage can be coupled with a medical policy that does or does not include pediatric dental.

Before the ACA, even though multi-line carriers such as Cigna, Blue Cross, Aetna and UnitedHealthcare sold both dental and medical, they’d always kept them separate, says Bill Kohn, Delta Dental Plans Association’s vice president of dental science and policy. With the exchanges and the variety of state laws, many of them have started embedding them with their medical.
“To the consumer, that sounds intuitively good because it makes everything simple,” Kohn says, but “the thing people aren’t aware of when you buy embedded plans is that you may be subject to the medical deductible.”

“Brokers really need to help employers evaluate what these dental benefits are,” Pyle says. While some small employers may also find an embedded plan easier to administer, Pyle suggests employees may be less than pleased with some of the limitations of an embedded plan.

With an embedded dental plan, a single high deductible may apply to both the dental and medical benefits together. For example, a deductible of $2,000 per individual or, say, $4,000, per family may have to be met before a patient is eligible for coverage. Some medical plan carriers might waive this deductible for dental, or establish a separate smaller deductible for dental; others may not.

“Once you get past the diagnostic and preventative coverage, with a lot of these plans, the rest of the dental benefits are subject to the medical deductible,” says Pyle. “So, while a typical dental deductible may be $50, a medical deductible could be as high as $13,000 a family or $6,600 for an individual.”

UnitedHealthcare, a multi-line carrier offering medical plans with embedded pediatric dental coverage, suggests employees may actually appreciate the combined medical and dental deductible. In a consumer guide to the pediatric dental essential health benefit, UHC says “only embedded pediatric essential dental benefits within the medical policy apply directly to the medical accumulators (deductibles and out-of-pocket maximums), helping those with high-deductible health plans meet their contribution obligation sooner.”

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