Direct Reimbursement (DR) is a self-funded dental plan with a number of advantages for the employer, employee, dentist and patient. It is an alternative to dental insurance.
With DR, the company only pays for the benefit the employee/patient receives and the cost to organize and administer the plan. Prior to DR, companies were forced to treat their dental plans like their medical plans by paying high insurance premiums for services that the employee may or may not use. The problem with treating medical and dental plans the same, is that dental costs are controllable, extremely predictable, and in most cases, unlike medical claims, non-catastrophic. Treating these plans the same costs companies more money. It is not necessary to pay for insurance on benefits that can be controlled, predicted and are relatively low in cost.
Here's how it works:
The covered DR patient goes to the dentist of his/her choice and receives the necessary dental treatment. Generally, the patient is responsible for paying the dentist for the treatment received and then seeks reimbursement later from the employer. If the patient's employer is using a third party administrator (TPA) to pay claims, the patient may ask the dental office to accept an assignment of benefits (the patient will provide an identification card stating this) and the dentist office can either call or go online to immediately determine reimbursement. The dentist must supply the patient with an invoice specifying the date of service, procedure code and cost. Assuming the patient has paid for treatment, and not assigned benefits, the dental receipt is provided to the patient's employer or the TPA, and the patient is reimbursed by the employer or TPA based on the employer's designed plan.
Benefits of Direct Reimbursement Plans:
What Employees want in a dental and medical plan.
- Employers can design the plan any way they want. The employer retains control.
- Employees have freedom of choice. DR has the best network of dentists because it includes all dentists!
- DR includes a rich benefit for the employee along with lower overhead costs for the employer.
- DR can include dental, medical and vision care depending on how the employer designs the plan.
- Benefits are based on a percentage of a specified dollar amount up to an annual maximum.
- There are no exclusions or limitations to services provided.
- There are no Usual and Customary Reimbursement (UCR) Schedules.
- There is no predetermination of benefits.
- There are no claim forms.
- The employer receives the credit for providing the benefit — not an insurance company.
What are the benefits of DR over Dental Insurance?
- Freedom of choice to go to a quality provider and the ability to stay with their chosen provider.
- Something that is user friendly without the confusing handbooks and UCR/limitations and complications.
- Ability to make treatment decisions without prior approval.
- Assistance from their employer to meet dental and medical costs.
- No restrictions on desired services and procedures.
- No exclusions for pre-existing conditions.
- The patient and dentist decide on the necessary treatment without interference from third parties or insurance companies.
- Many insurance companies have a "waiting period" before major services will be paid; with DR, there is no wait.
- Most insurance companies require a minimum of 10 employees. The tax deductible benefits of a DR plan start with one employee.
- UCR schedules are eliminated under a DR Plan.
- The patient may ask for a cash discount if they are paying at the time of service.
- 100% of the funding by the employer goes to pay dental benefits (there are no profits going to the insurance company).
- A modest administrative fee will be charged if the employer decides to use a third party administrator to process claims.