Separate and Conquer: ACA-Driven Benefit-Plan Strategies

So much of the ACA-related talk in the marketplace has had to do with bundling health and dental benefits. But here’s a thought: If any of your clients have combined medical and dental plans, it may actually be time to separate these plans. 

In official terminology, a dental plan divorced from a medical plan is called a separate offering. In general, separate offerings are characterized by 1) an independent decision to purchase and 2) a separate premium. 

Let’s look at some reasons why a separate-offering approach makes sense.

One common characteristic of combined plans is single election. With single election, employees only have one choice when it comes to their combined plan: Enroll in both plans, or no plan at all.

By separating a combined plan with single election, an employer can:

• Provide greater flexibility in dental-benefit plan design. Since standalone dental plans are excepted benefits, most ACA provisions do not apply.  Once the plans are separated, the resulting standalone dental benefit plans will not have any plan-design or actuarial-value requirements, so they can be as skinny or rich as the employer desires.
• Provide greater choice to employees who may want to enroll in medical or dental coverage, but not both. The two options under single election expand to four once the plans are separated: Take both, take only the medical, take only the dental, or take nothing at all. These are all plausible scenarios.
• Reduce the impact of the “Cadillac tax” which will be imposed on high-cost medical benefit plans beginning in 2018. The tax is imposed on the overall cost of the plan. Separating out the dental benefits lowers the overall cost, making the plan less susceptible to the tax or lowering the tax exposure.

If vision benefits are included in health benefit plans the same considerations may apply.

Another strategy to consider given the ACA health-plan environment is to exclude oral surgery from the medical benefit plan and include this benefit in the dental plan. 

Benefits of this strategy include greater benefit-plan flexibility, avoidance of the Cadillac tax and improved management of the oral-surgery benefit with a specialty vendor such as Delta Dental.

Convenience is often cited as a reason not to separate plans. However, if the dental is placed with a carrier like Delta Dental that specializes is easy transitions and low-stress administration, the result may actual be a decrease in overall “noise” coming from the medical and dental plans.

Delta Dental has dental and vision plans to fit each employer’s ACA benefits strategy.  Talk to your Delta Dental representative who will help you optimize each of your clients’ benefit plans.