Buyer’s guide to dental benefits (August 2009)

The recession has taken its toll on sales of dental plans and a proposed overhaul of NHS dentistry may slow the market further, but flexible benefits schemes are offering an economical way ahead, says Sam Barrett

DIY extractions, hundred-deep queues for a place with a National Health Service (NHS) dentist, and falling standards of oral health suggest dental plans should be a must-have benefit. But although new providers have been attracted to market, the volumes of sales that were predicted have failed to materialise. Wayne Pontin, business development director at Jelf Employee Benefits, says: “Things were looking good for dental insurance, but along came the tough economic climate and employers became reluctant to take on new benefits.”

The downturn in the economy certainly seems to have caught out providers, with several new players feeling underwhelmed by the level of sales they have attracted. Peter Lauris, sales and marketing director at Medicash, says: “It is not selling very well.”

The company launched a standalone corporate dental plan, Medicash Smile, in April 2008 in response to feedback from advisers. “Although we have seen an increase in sales of our cash plan, there is no real appetite for the dental plan at the moment,” says Lauris.

Another provider, Simplyhealth, has also seen its sales inch upwards after it launched a dental scheme at the end of 2006. James Glover, its corporate sales and marketing director, says: “Progress has been slow, but we are expecting some growth this year. We ran a dental survey earlier this year which showed there was an increasing awareness of the product and its attractiveness.”

One factor that may hinder the market’s growth is the announcement of another overhaul of NHS dentistry. This may result in employers delaying the introduction of a dental scheme until the new regime has bedded in. The current system, which was introduced in April 2006, has endured a barrage of criticism from dentists and patients alike. Pam Whelan, corporate dental sales manager at Denplan, explains: “Since the contract came in, 1.2 million fewer people have visited an NHS dentist and complex treatment has dropped by about 50%. It has had a very negative effect on dental health.”

Independent review of NHS†dentistry

These types of outcome led to the government launching an independent review of NHS dentistry, which recommended dentists’ remuneration should be based on the number of patients registered and the treatment courses carried out.

But although the government’s recognition that the current system is not working has been applauded, few expect the overhaul to make much difference to NHS dentistry. Paul Hunter, marketing director at Dencover, says: “Whether a dentist is paid according to the number of patients on their books or not, they can still only provide the same number of hours of care as they do now.”

Michelle Bishop, business development manager at National Dental Plan, says there will always be a demand for insurance. “NHS dentistry cannot compete with private practice,” she adds. “Even if there is more access to NHS dentists, people like the choice they get by seeing a private dentist.”

Reform is also unlikely to have a major effect on product design. Plans are designed to offer a range of levels of cover to suit everyone, from an employee with a good level of dental health and an NHS dentist, through to someone with rotten teeth who is going private.

Types of dental benefit

As an example, Cigna Healthcare offers two plan designs, each with four levels of cover. One plan is comprehensive, where each type of treatment has a limit and there is a maximum annual limit. The other is co-insurance, which gives 80% reimbursement on any restorative work up to a limit. Kirsty Jagielko, head of product management at Cigna Healthcare, says: “We find the comprehensive plan works well for company-paid schemes, while the co-insurance scheme is good for flexible and voluntary benefits schemes.”

But although there is plenty of choice, cost remains an issue for employers in the current economic climate. Claire Walmsley, healthcare manager at JLT Online Benefits, explains: “We had loads of enquiries at the start of 2008, but many did not go ahead because of the cost. It is still quite an unusual benefit and although usage is high, the cost is a deterrent.”

As well as deterring employers from taking out cover in the first place, cost is also leading to reviews by organisations with cover already in place. Some, for example, have downgraded their dental cover, says Jelf’s Pontin. “Some, especially the large and medium-sized companies, have downgraded from company-paid to voluntary [schemes] or to a plan with lower levels of cover.”

Another cost-saving trend in the dental market is the move to including cover in a flexible benefits scheme. According to Whelan, this is where most new business is coming from. “There are upfront costs with implementing flex, but the ongoing savings are attractive once schemes are up and running,” she says.

Offering dental perks through a flexible benefits scheme

Take-up can be fairly healthy, with about 20% of employees signing up to dental perks through a flex scheme, she adds. This number can increase where communications are well targeted and effective.

Employers are also looking for other products to meet employees’ demand for dental cover. Adding it to a private medical insurance plan is one option. This has always been possible for larger schemes but, increasingly, smaller employers can include it through menu-based products that are available from insurers such as Aviva, Standard Life Healthcare and WPA.

With budgets under pressure, cash plans can also prove an attractive alternative. As an example, Pontin singles out Westfield Health’s Foresight plan, which gives £45 worth of dental benefit a year in exchange for £1 a week. “This would provide enough cover for a couple of check-ups a year for many people, but on top of that you get other benefits, including optical, physiotherapy and an employee assistance programme,” he adds.

Focus on facts:

What are dental benefits?

Dental benefits enable employees to claim back all, or some, of the cost of dental treatment. There are two different options with dental insurance. Some plans give a limit for each type of work, for instance routine examinations or restorative treatment. Others have a menu-based approach, with limits set according to the procedure. There is plenty of choice on the level of cover, too, ranging from an accident and emergency plan right through to a scheme that will pick up the cost of routine and restorative treatment from a private dentist. As well as insurance-based schemes, dental benefits can also be provided through a healthcare cash plan or as an add-on to a private medical insurance scheme.

What are the origins of dental plans?

Dental insurance schemes first appeared in the corporate market during the 1980s, when National Dental Plan launched a scheme. However, dental cover was already available before this as a benefit through a healthcare cash plan.

Where can employers get more information and advice on dental perks?

With no trade associations or bodies to represent dental providers, more information can be obtained from a benefits consultant or intermediary. Also, visit

Nuts and bolts:

What is the annual spend on dental plans?

A total of £71.5 million was spent on dental insurance in 2008, according to healthcare analyst Laing and Buisson, although its figures include individual plans as well as corporate ones. On top of this, £503 million was spent on cash plans, which have dental as one of the main benefits.

Which dental providers have the biggest market share?

Dental providers are cagey about their corporate sales figures, but the market is dominated by two players, Denplan and National Dental Plan, with Cigna Healthcare and Bupa Dental also in the top four.

Which providers increased their share the most over the past year?

Their recent entry to the corporate market means that newer players, especially Dencover and Simplyhealth, have increased their market share the most.

In practice:

What are the costs involved?
Dental cover can start from as little as £3 a month per employee for accident and emergency cover, up to £30 a month for the most extensive cover. Prices will also vary depending on the number of employees covered and the way the scheme is funded. For instance, a voluntary scheme can cost between 50% and 80% more than a company-paid one.

What are the legal implications?

There are no legal implications attached to offering employees a dental plan. The employee is free to choose any dentist they like, either on the National Health Service or private, and, if there are any problems with the treatment or payment, this is a matter that would be resolved between the employee and their dentist.

What are the tax issues?

A employer-paid plan is a benefit in kind for tax purposes, with employees paying income tax and national insurance on the value of the perk.

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