Bite the bullet
Rising dental charges are outstripping the cover levels of many cash plans. Sam Barrett investigates how the market should respond
“With a mid-range cash plan you might get £120 a year towards dental treatment. This would cover your check-ups and minor work but wouldn’t really give you anything for the catastrophes such as non-emergency root canal work or a crown,” says Mike Blake, compliance director at PMI Health Group.
Just how much it can cost to visit a dentist was highlighted earlier this year in Channel 4’s Dispatches programme, The truth about your dentist. Of the seven undercover patients that went for an NHS check-up, six were recommended to have some treatment carried out privately.
In most cases this was for hygiene treatment, although the fee for band one treatment on the NHS, currently £17, includes a scale and polish.
Additionally, one undercover patient who needed root canal treatment and a crown, which, at the time, should have cost £198 on the NHS, received quotes ranging from £598 to £725 for the work, even though he went along as an NHS patient.
Certainly at the £1 a week level, dental benefit is relatively low on cash plans. For example Simplyhealth gives £60 of dental cover; Westfield £55 plus £110 for dental work required as a result of an accident; and Health Shield, where the Essentials product is 75p a week, gives £50.
This would be adequate for a couple of check-ups on the NHS, which cost £17 a time, but if additional work is required the cover would fall short. Band 2 NHS treatment costs £47, covering fillings, root canal treatment and extractions, while band 3 is £204, covering more complex procedures such as crowns, bridges and dentures.
Similarly, if the employee was unable to source an NHS dentist they could find the cover lacking. The cost of seeing a dentist privately varies but, according to price comparison site Whatprice, the average cost of an initial consultation is £54.
There are ways to increase the cover so employees aren’t out of pocket when they look after their teeth. Shifting away from the £1 a week model is one option. “If an employer spends £2 or £3 a week, employees will get access to a reasonable pot of money for their dental work,” says Matthew Judge, director at Jelf Group. For example at £2 a week, employees with SimplyHealth’s Simply Cash Plan get £120 of dental benefit and, at £3 a week, £180.
Bespoking is also an option, although many of the cash plan providers will only entertain this on schemes with at least a couple of hundred members. There are exceptions with BHSF and Westfield happy to tailor benefits for much smaller groups. “Our Mosaic scheme allows the adviser to tailor benefits for groups as small as 20 employees,” explains Paul Shires, executive director, sales and marketing at Westfield Health. “If they want to increase the dental benefit to £250 a year they can.”
Dental plan and cash plan providers will need to be more flexible in the future
Doing this will affect the price. While Westfield’s off the shelf plan Foresight gives £55 of dental cover a year in exchange for £1 a week, if you replicate the other benefits through Mosaic and increase dental benefit to £250 the premium rises to £2.29 a week for a group of 20 employees with an average age of 40.
As an alternative, or for smaller groups, you could put in a low level of cover and allow employees to flex up. “We find most employers prefer to put in a reasonable level of cover and allow employees to top up if they want rather than put a bespoke scheme in place,” says Lara Rendell, marketing manager at Health Shield.
This can satisfy demand for cover but, as employees are given the choice to upgrade, there is a risk of selection against the insurer. Subsequently costs are higher than if the employer paid.
A dental insurance scheme such as those offered by Bupa, Cigna, Denplan, Simplyhealth and WPA is another option for more comprehensive cover. “There are two types of plan in the corporate market: some set benefit limits for different treatments while the others offer an overall sum that can be claimed each year, sometimes with an element of coinsurance or an excess,” says Blake.
Denplan launched a range of the more restrictive type earlier this year to complement the more comprehensive products it already offers. “The feedback we’d had from brokers indicated a need for this type of product,” says Matt Reeves, corporate channel manager at Denplan. “It gives
hem a lower price point.”
For example, the cheapest unrestricted product Denplan offers starts from around £8 a month as a flexible benefit, depending on the size and profile of the group, while the cheapest more restricted benefit schedule plan comes in at between £5 and £6 a month.
At this price the cheaper plan would give you an annual limit of £600 for routine and restorative dental treatment, with treatment limits based on NHS charges; £600 towards injury and emergency dental treatment; £12,000 for mouth cancer; hospital cash benefit of £50 a night up to £1,000 a year; and up to £1,000 for dentist call-out fees. In comparison, the unrestricted plan, Denplan Elementary, offers 100 per cent reimbursement for NHS treatment charges as well as reimbursement for private treatment up to NHS limits.
With their higher levels of cover, and a not dissimilar price point to some cash plans, there is a risk that cash plan providers will see some of their hard won business switch over to dental plans as employees seek more benefit.
But, although his company offers both, Howard Hughes, head of employer marketing at Simplyhealth, doesn’t believe this will be the case. “Cash plans give much broader cover, including optical and physiotherapy,” he says. “On top of that the optical and employee assistance programme benefits enable employers to fulfil some of their duty of care requirements.”
But this could change. Reeves believes further innovation may occur in the dental plan market, with providers adding in some of the benefits seen on cash plans, for example optical and physiotherapy benefits, to give them a broader appeal. “We haven’t really competed with cash plans in the past but this will change. Dental plan and cash plan providers will need to be more flexible in the future,” he adds.
This could push the cash plan providers to up their dental benefits. Shires says he won’t rule out increasing dental benefit but adds that it’s not something he’s asked for very often. “Employers and employees like the current price levels. If we replicated the benefits on a dental plan you could be looking at a premium of as much as £300 a year. The P11d benefit on that compared to £50 a year would put some employees off,” he explains.
There’s also some reluctance to increase the dental cover on cash plan because of the effect it would have on the premium. “If you increase the cost you could destroy the model,” says Judge. “At a few pounds a week you get a mix of people that forget to claim alongside those that claim for everything. Increase the premiums and you run the risk that you replicate the problems in the medical insurance market where everyone tries to claim back their premium. The cash plan model works: don’t make them become something they’re not.”