Tuesday, November 07, 2006

Dental Insurance: Is it really a benefit?

Five years ago my employer began offering employees a company sponsored dental plan. The plan was instituted due to high demand from employees whose children would soon be in orthodontia.

The plan requires the employee to pay the entire premium using pre-tax dollars. Benefits kick in on a sliding scale. The plan pays benefits at a higher percentage each year, hitting maximum percentages the third year. This prevents members from enrolling, immediately having all their dental work completed, and canceling.

About half of my co-workers are enrolled in the plan. Lately, many of the single and married employees without dependants are doing the math; comparing actual cash output to benefits received. They are finding that even with high usage years (cavities and a crown) the costs are outweighing the benefits over the long haul. Instead they are opting out of the dental plan and setting money aside in a flexible spending account to cover dental expenses. The plan is cost effective if the employee has a couple of dependents, especially if they need braces.

The same could probably be said for some employer sponsored vision plans; the costs outweigh the benefits if you are paying the entire premium.

Bottom line: Not all benefit plans are cost effective. Do the math and consider your options before automatically enrolling in benefit plans

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