In meetings with their CEOs, increasing numbers of controllers at small companies-those with less than 50 employees-are considering making dental benefits voluntary. Definition: With voluntary benefits, organizations enable their employees to buy, say, additional disability coverage, certain types of legal assistance, and pet insurance via payroll deductions. In this way, employers enrich their benefit offerings, while employees incur all additional costs.

Controllers who explore this approach to dental benefits acknowledge that dental benefits are relatively inexpensive. Proof: According to Mercer, the per-employee cost for dental coverage averaged $692 last year, up 10 percent from 2006’s average cost of $629. This is significantly less than the cost of health benefits, which was $7,983 per employee in 2007. Key point: While the per-employee cost of dental benefits rose $63 last year, the cost of health benefits jumped $460.

CR emphasizes that the percentage of companies that are making their dental insure nee voluntary is small. Proof: According to a recent survey from the National Association of Dental Plans (NADP), only ?7 percent of employers with fewer than 50 employees are making dental benefits available to employees at their own cost. Furthermore, only 5 percent of large organizations-those with 10,000 employees or more-offer these benefits voluntarily.

At the same time, there is budgetary logic to a voluntary approach. Explanation: According to the most recent MetLife Employee Benefits Trends Study, dental coverage is only the fifth most popular benefit, following medical, vacation, pensions, and prescription drug coverage. Meanwhile, the rising cost of health benefits is forcing some employers to redeploy their limited benefit dollars toward medical premiums. Key point: According to NADP, 18 percent of all organizations say they are likely to change dental coverage to a voluntary benefit.

In the meantime, most employers continue to pay the lion’s share of dental coverage costs. According to Mercer, for example, 78 percent of organizations required employees to contribute to the cost of employee-only coverage in 2007, while 87 percent required a contribution forfamily coverage. Here, the average monthly contribution for employee-only coverage was $17, or 56 percent of premium. Meanwhile, the average monthly contribution for family coverage was $51, or 59 percent of premium. At the same time, the median deductible for dental plans was $50 last year, unchanged since 1997. Additional information from Mercer about the cost of dental coverage includes:

* For individual dental coverage, costsharing benchmarks include median annual maximum benefit, $1,250, and median lifetime maximum orthodontic benefit, $1,500.

* Eighty-eight percent of dental plans include an individual annual maximum benefit per year for preventive and restorative care. Here, the most common maximum benefits are $1,000 (37 percent of employers) and $1,500 (32 percent). Only 4 percent of employers have a maximum that is less than $1,000.

* Only 13 percent of organizations bundle dental benefits with their medical plans. These tend to be smaller employers looking for simpler administration and more favorable rates.

* In 2007, employers shifted to dental preferred provider organizations (PPOs) and dropped health maintenance organizations (HMOs). Details: The use of PPOs by dental plan sponsors jumped to 73 percent in 2007, up from 67 percent and 61 percent in the two previous years. At the same time, the percentage of employers offering dental HMOs fell from 17 percent to 15 percent in 2007.

Background: The low usage of dental HMOs has several causes. These include narrower HMO networks, which hamper access to providers, and HMO plan design, which is less flexible than PPOs and more resistant to cost-saving adjustments. Adds Mercer, “While it is generally less expensive to cover an employee through an HMO than a PPO, administration fees for dental HMOs, as a percentage of the total premium, are often relatively high.”

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