Dental arithmetic

Demand for dental benefits is rocketing and with new providers moving into the market, now is the time for advisers to clean up, says Sam Barrett

According to figures from Laing & Buisson’s Health & Care Cover – UK Market Report 2007, there was a 31 per cent growth in the number of people with stand-alone dental plans in 2006, continuing the growth started the previous year when the numbers grew by 13 per cent .

This means that around three million people have plans, spending some 464m a year on their cover.

While sales to individuals have driven the increase, the corporate market is beginning to feel the increased demand. “We’ve seen the explosive growth in the individual market coming through into the corporate market this year,” says Pam Whelan, corporate dental sales manager at Denplan. “When employers survey their staff about the benefits they want, in nine out of 10 cases, dental insurance comes top.”

Indeed, in this year’s Reward Management Survey, the Chartered Institute of Personnel and Development found that dental was the third most popular benefit, with the percentage of employers offering it set to increase from 14 to 22 per cent by the end of 2007.

The main reason for this growth is the change in the way NHS dentistry is funded. In April 2006, a new NHS contract shifted responsibility for fund- ing to the primary care trusts (PCTs) and changed the way dentists are remunerated.

Rather than being paid for the NHS work they carry out, dentists are now given a number of units of dental activity (UDAs) that they must use up over the year.

The amount dentists can earn through UDAs is based on previous earnings but, by the end of the first year of working under the new contract, there were serious signs of strain. While some dentists had used all their UDAs by March and were forced to send patients away or treat them privately, others are now facing financial clawbacks, which can be as high as 100,000, for the UDAs they have not used.

Unsurprisingly, this has resulted in a lot of dissatisfaction among dentists, with around 10 per cent of dentists leaving the NHS over the first year to go into private practice.

“It looks as through this trend is set to continue,” explains Abby Bowman, public relations manager at HSA. “A recent study by the University of Dundee found that only 3 per cent of dental students intend to work wholly within the NHS for their career.”

Worse is yet to come. In April 2009, the ringfence will be lifted on funding for NHS dentistry and it will be up to the PCTs to determine how their budgets are allocated. This will see NHS dentistry fighting for budget alongside other areas of healthcare, many of which are monitored or more visible. “We’ve already reached the point where it can be difficult to find NHS treatment for children and when the ringfence comes off it will drive more dentists away from the NHS,” says Kirsty Jagielko, health benefits product manager at Cigna Healthcare.

Another driver is helping to grow the dental market as Paul Roberts, healthcare consultant at IHC, explains: “The growth in flexible benefits has helped dental insurance. Once a company has the administration in place, it’s very easy to add new benefits as employee demand grows.”

Given the upheaval in NHS den-tistry, the benefits to employees and employers are clear. For employees, there is the reassurance that they will receive some financial help tow-ards the cost of any dental treatment.

This has knock-on benefits for employers. “For the money spent on dental plans, employers benefit from high levels of appreciation among employees,” says Simon Curtis, health and risk consultant at Jardine Lloyd Thompson. “Everyone has the potential to use it at least once a year and without having to be unwell.”

Dental plans can also help reduce absence, according to Chris Bromilow, head of company sales at Bupa. “Rather than having to take a day off work to see a dentist that may be miles away, an employee can take an hour or so to see a local dentist,” he explains.

Employees are also more likely to go for their check-ups as they know the cost is covered. This can help prevent more serious conditions developing and thereby reduce the likelihood of absence.

There are a number of different dental plans available to corporate customers with the market growing as new providers come into it and existing providers beef up their product ranges.

For example, in the last year, Denplan has extended its corporate range to six plans, HSA has launched a dental plan and Standard Life Healthcare has included a dental option in its new Business Healthcare proposition for the SME market, which can also be bought on its own.

“A company might want dental on its own or a mix of medical insurance for its executives and dental for all its employees,” explains Julian Ross, head of marketing and communications at Standard Life Healthcare. He also believes by including it as an option within the proposition it is easy for advisers to remind employers of its benefits.

Capitation plans, where the premium is based on the person’s dental health, are the most popular type of plan in the individual market but the extra administration required as well as potential misunderstandings about cover means they don’t translate well to the corporate market.

Instead the most common type of plan is the indemnity plan provided by the likes of Denplan, Cigna, HSA and WPA. These provide a table of benefits for different types of treatment.

For example, on Cigna’s Pearl plan, you can claim back 34.50 a year for a normal examination, 31.40 for a one surface filling, 258 for a porcelain crown and so on.

On some plans, there is a difference on the reimbursement an employee would receive for preventative and restorative work, with the former receiving a full refund up to a limit while the latter would only qualify for a 50 per cent or 75 per cent refund.

For example, on HSA’s plan, there is a 75 per cent refund on treatment up to the annual limit on the plan. Curtis says he likes this approach. “The co-insurance element can help to keep premiums more manageable,” he explains.

At the budget end of the indemnity product range, employers can take out plans that cover accident and emergency work. Monthly premiums for this can be less than 4 per employee.

Roberts is sceptical about this level of cover. “I’ve never been in a situation where I would advise a client to take out a plan covering accident and emergency only. Employees don’t understand them so it’s better to have something they can actually use,” he says.

But Whelan says there is demand for it. “It might be provided as a company-paid benefit with employees offered the opportunity to upgrade to a plan that will pick up routine examinations and treatment,” she explains.

Cash plans are another option. As well as providing dental cover, they also have a host of other benefits, including optical, physiotherapy and, in many of the corporate plans, an employee assistance programme. But Curtis says employers should think about their motivation for putting the benefit in place before taking this option. “If the main driver is to offer dental benefits then don’t blur the message with all the other benefits,” he says.

But with demand for dental benefits rocketing it’s likely that new plans, and providers, will be coming onto the market in the near future nOne of health insurance advisers IHC’s clients is Cobham, the aerospace and defence systems company. It recently reviewed its benefits package as Paul Roberts, healthcare consultant, explains: “Cobham wanted to offer a wider benefit structure that would address some of the changes in demand. As it had seen employees having problems getting to see a dentist, it wanted to include dental insurance within the package.”

Roberts recommended dental insurance from Denplan, putting in place three plans within the flex scheme – Key, which covers accident and emergency work; Essential, which offers some reimbursement for the cost of dental work; and Extensive, which offers a higher level of cover.

This allows employees to pick the cover that suits their requirements, whether this be their budget, the amount of dental work they require or the scale of their dentist’s charges.

Roberts says it was very straightforward including Denplan’s plan within the flex scheme. “It was easy to do,” he says. “We included the terms and conditions and key facts on the flex system so employees could see what cover was included and know it was right for them.”

The new scheme, including the dental insurance package, was rolled out to 1,200 members of staff at the beginning of the year and already it is proving to be a popular benefit. “It’s a win win situation,” adds Roberts. “It helps Cobham alleviate the problem employees were experiencing finding dental treatment and it’s also a cost-effective way for employees to have the reassurance of help towards their dental bills.”