Buyer’s guide to dental plans (August 2010)

Focus on facts

What are dental benefits?

Dental benefits allow employees to claim back part, or all, of the cost of dental treatment. They can be provided through a health cash plan or as an insurance product. The level of cover can vary, ranging from accident and emergency treatment to treatment for cancer.

What are the origins?

Dental insurance products first appeared in the UK during the 1980s. However, these were preceded by dental cover made available though a health cash plan.

Where can employers get more information and advice?

View articles on health benefits here.

Nuts and bolts

What are the costs involved?

Costs vary depending on the level of cover required, the way a scheme is funded and the number of employees covered. Accident and emergency dental cover can cost from £3 a month per employee. The average cost of dental insurance is approximately £10 to £15 a month per employee.

What are the legal implications?

There are no legal implications in offering staff dental perks.

What are the tax implications?

Dental perks are classed as a benefit in kind, so staff are liable for tax and national insurance.

In practice

What is the annual spend?

According to Laing and Buisson, the spend on employer-paid dental insurance in 2009 was £42.3m. The total dental insurance market is worth £75.9m.

Which providers have the biggest market share?

Market commentators say Denplan and Cigna Healthcare are dominant players. Other providers include: Aviva, Axa PPP Healthcare, BHSF, Bupa, Cigna Healthcare, Dencover, Denplan, Health Shield, HSF, Medicash, Munroe Sutton, National Dental Plan, National Friendly, Simplyhealth, Standard Life, Westfield Health and WPA.

Which have increased their share?

There are no figures available, but Simplyhealth continues to increase its presence in the market.

Ongoing reforms of the dental industry are likely to have an effect on the benefits market, but employers are still keen to offer dental plans to their workforces, says Tynan Barton

A few years ago tabloids raged about long queues to obtain a place with an National Health Service (NHS) dentist and ran scare stories on the DIY treatment people were inflicting on themselves. However, figures released in March from The Health and Social care Information Centre show a minor improvement to the number of patients now seen by NHS dentists – up 0.7% over the previous 24 months; now at 55.1% of the population.

This can be attributed to changes introduced by the last government, which included the 2006 reforms aimed at improving patient access to NHS dentistry services and simplifying payment for dental treatment. Primary care trusts (PCTs) were also put in charge of commissioning local dental services and deciding where to locate new services. The independent Steele review, published in June 2009, then sought to ensure widespread changes were made to NHS dental contracts in order to increase access to dental services and improve service quality.

However, this year’s change of government and the announcement of budget cuts have raised doubts over the direction of dental policy. A key concern for the industry is that PCTs will be free to allocate funds anywhere they like.

Morag Peterson, product manager at Cigna Healthcare, says: “It is possible dentistry will take a lower priority when it comes to how they allocate that money. The new government is going to take little control and it is going to be up to the PCTs, so it is going to vary by postcodes as to how that money is spent.”

Impact on product design

All these changes could impact on the dental benefits market, particularly in terms of product design. James Glover, corporate sales and marketing director at Simplyhealth, says: “There is a state of anticipation, of waiting to find out what exactly the changes are going to be, if any, how the market should respond to that, and how, as a consequence, employee benefits geared towards accessing dental treatment should be designed.”†

The changes may result in more dentists choosing to go private, further limiting access to NHS dental services. This could lead to an increase in the number of employers offering dental benefits to staff. Chuck Misasi, senior vice president at dental network provider Munroe Sutton, says: “The trend is going to be that employers will continue to seek out dental benefits – cash plans and insurances – because more and more people are having trouble finding an NHS dentist.”

There are two main types of dental benefit that employers can offer their staff: dental cover within a health cash plan and dental insurance. The former provides money back on everyday dental bills up to an annual limit, while dental insurance offers more comprehensive cover.

At their most basic level, all dental benefits include routine check-ups and treatment, accident and injury cover, and cover accessing NHS and private treatment. These basics are typically subject to a fixed annual monetary limit, which will vary depending on the type of plan offered.

Over the past few years, the dental benefits market has been relatively flat. Pam Whelan, corporate sales manager at Denplan, says: “The awareness and appreciation of what a dental plan brings to a benefits package has not diminished. Employers that were looking to implement a scheme may have pushed it back, but nobody has been turned off from moving forward with plans that had already been made. It is not recession-proof but, equally, we have not seen as big an impact on the business as previously anticipated.”

Lara Rendell, marketing manager at Health Shield, agrees that dental plans are still popular. “There has been an increase in the call to employers to look after staff and their health and wellbeing,” she says. “They have always been keen to provide dental as a benefit, but, if anything, I think there has been an increase in them wanting to help employees through these difficult times.”

Dental perks improve morale

In Simplyhealth’s Annual dental research, published in March 2010, 67% of respondents said dental benefits improved staff morale and 66% said they reduced sickness absence. A further 74% said it was the responsibility of the organisation to look after its workforce’s oral health.

Being seen to care about employees’ wellbeing by offering dental perks can also help an employer become an employer of choice. Cigna’s Peterson says: “Employees’ needs are going to increase, so it is going to be seen as more of a recruitment and retention benefit. People are going to be struggling to get the dental care they need, and there is an opportunity here for the employer to meet that need.”

To help meet this demand, providers have continued to bring new products to market. For example, in April, Bupa launched a new flexible dental plan offering five benefit levels. Premiums start at £3.51 a month.

Cost remains an issue for many employers in the current economic climate. Offering dental benefits through health cash plans is a popular choice because of the ease of implementation and the low cost.

Dental cover can also be included in private medical insurance (PMI) schemes, although this can be more expensive. Denplan’s Whelan says: “Employers recognise that dental is an integral part of employee wellbeing and complements the existing PMI offering. Typically, an organisation that is committed to improving employee wellbeing will look at providing dental benefits in addition to PMI.”

The trend of offering dental through flexible benefits is still gaining popularity among employers as they recognise it as a way to offer dental benefits in a difficult economic climate while controlling the cost to the organisation.

According to Michelle Bishop, business development manager at National Dental Plan, employers that are planning to roll out such schemes typically have a long-term focus. “In some cases, you will have people opt for voluntary arrangements in the first place, in order to prepare to go into a flexible benefits arrangement, so they can provide the benefit as soon as possible,” she says.

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