When the government makes medium groups become small groups and what that means for dental benefits

Small groups and individuals in Virginia are being forced to buy insurance products that they don’t want or need.  As the definition of small group changes in 2016, groups, brokers and consultants should understand the rules if they are going to make wise decisions regarding health and dental coverage.

Beginning in 2016, the federal Affordable Care Act (ACA) redefines small groups as those having up to 100 employees.  Prior to 2016, the small group definition was 1-50. However, all small groups are not created equal under this federal change. 

Groups with 50 or fewer employees are free to offer or not offer benefits to their employees without fear of fines.  Groups with 51-100 employees are not only required to offer benefits to employees as part of the ACA’s shared responsibility provisions (commonly known as the employer mandate), but since they will be defined as small groups for purposes of the ACA, they will have fewer plan options. 

Why will these small groups have more limited choice? Because, while the federal ACA does not require individuals or groups to purchase specific benefits (but will bestow a tax penalty if you don’t have minimum essential coverage), it forces carriers to include certain benefits as part of plans offered in small group and individual markets. 

It’s as if the government said to an individual, you are not required to purchase a car with an infant car seat, but then the government turns around and tells all car manufacturers, “You must include a car seat in every car sold to an individual.”  You don’t have to buy it, you just can’t not buy it.  You have to buy the car seat whether you need it or not.

From the small group and individual insurance market perspectives, there are 10 car seats — called “essential health benefits.”  Half of one of those 10 car seats is pediatric dental benefits, and these benefits are treated differently from the rest — something that needs to be understood by these newly defined small groups with up to 100 employees.   

If your group is lucky enough to be headquartered in Virginia (and a handful of other states), the rules are a bit friendlier when it comes to dental benefits.

In 2014, the Virginia General Assembly passed legislation clarifying that a carrier offering plans in the small group or individual market is allowed to offer health plans without pediatric dental benefits so long as two conditions are met: First, there must be a qualified dental plan available for purchase and, second, the carrier must disclose that the pediatric dental benefits are not included in the health plan. 

Since carriers are offering exchange-certified dental plans both on and off of the exchanges in Virginia, groups and individuals are free to shop for their dental benefits the way they always have. This applies to all small groups, those that aren’t required to purchase any benefits for employees (under 50) and those that must offer benefits (51-100).

Great news, right?  Maybe not.  As it turns out, almost all carriers are forcing small groups to include pediatric dental benefits in their health plans despite the fact that the carrier is not required to do so and small groups may already have a dental plan they like.  Just like the car seat analogy, you don’t have to buy it, you just can’t not buy it.

In some cases, the resulting pediatric dental portion of the health plan premium is small since the dental benefits are subject to the medical deductible.  Groups opting for these types of plans should most certainly purchase a separate standalone dental plan. Otherwise, employees may take a child to the dentist believing they are covered only to find that they are on the hook for 100 percent of the bill since they have not met a huge medical deductible.

Other plans are charging a bit more premium to provide what looks like a traditional dental benefit. Buyer beware. Groups, brokers and consultants should review these plans carefully.  Often, even when diagnostic and preventive dental services such as exams and cleanings are covered without having to meet the medical deductible, the other categories of benefits such as basic (have you ever heard of a child needing a filling?) and major services are subject to the medical deductible.

Additionally, any orthodontia benefit must meet strict medical necessity criteria.  Furthermore, the coverage levels are not as high as a typical 100/80/50 dental plan. They often look more like a 90/60/50 plan and, in reality, play-out more like a 90/0/0 plan. And keep in mind this all assumes the employee is staying in-network.

Groups and brokers considering one of these plans should do the math. Estimating the costs of treating a child who visits the dentist twice in a year and receives some pretty common procedures such as cleanings, X-rays, fluoride, sealants, a couple fillings and a pulled tooth reveals that the employee in a plan where the dental is subject to the medical deductible would owe 100 percent of the $746 bill (assuming the high medical deductible had not been met).

The employee in an embedded medical plan covering diagnostic and preventive dental services would owe $407. An employee in a traditional standalone dental plan would owe $140. Even taking into consideration the difference in the costs of premium, the employee is better off in a traditional standalone dental plan. 

It’s unfortunate that big health insurance companies are forcing small groups and individuals to buy something that they don’t want or need.

Perhaps as groups and brokers understand what is and is not required market pressure will be applied and the result will be consumers having the freedom to shop for what they want and need. In the meantime, many groups and individuals will be left with having to purchase duplicative coverage in some cases and will be paying more premium than necessary.

Delta Dental of Virginia has responded to this situation by providing flexibility to small groups, allowing them to tweak benefits by removing diagnostic and preventive services from their plans or adjusting other levels of coverage.  None of this is necessary from a legal and regulatory perspective, however.  Carriers are free to offer plans without pediatric dental. Groups with fewer than 50 employees can purchase any dental plan or no dental plan and are not forced to provide any health benefits at all.

However, the new “small” groups of 51-100 must provide health benefits but are allowed to purchase dental plans separate from their health plan.  Brokers and consultants should understand that.

Chris Pyle is vice president, marketing and government relations, for Delta Dental of Virginia.