Will ACA prompt some patients to drop dental insurance?

While 5.3 million children will gain dental coverage in 2014 thanks to the Patient Protection and Affordable Care Act (ACA), up to 11 million adults could drop their own dental coverage when their children are covered separately, according to the National Association of Dental Plans. And parents who switch to dental coverage under their medical insurance may have to change dentists.

Currently, adult and children's dental plans are mostly sold as group plans offered by employers. These dental plans are separate from medical plans. As one of the 10 essential health benefits under the ACA, pediatric dental benefits will be part of medical plans sold outside of the insurance exchanges. Pediatric dental plans also will be sold in insurance exchanges, both packaged with medical plans and as standalone dental plans.

While large companies (more than 50 employees -- in 2016 this will increase to 100) won't be affected by the upcoming changes in 2014, employees in small groups will have to decide this year how to get the dental benefits mandated for their children.

What that means is the dental coverage that nearly 23 million children now have as part of their parent's policy in the small group market will be duplicated by their medical coverage beginning in 2014, according to Evelyn Ireland, the executive director of the National Association of Dental Plans. About 5.3 million children are expected to gain dental coverage next year, mostly through public programs such as Medicaid or the Children's Health Insurance Program (CHIP).

To avoid duplication, parents have to decide by the end of this year whether to take their children off their separate dental coverage. If they do, they may have to change dentists for the children, depending on which dentists are in the medical carrier's network.  

"I don't think there's any question that children's coverage will be expanded, whether it's through Medicaid, CHIP, or private programs," Ireland told DrBicuspid.com. "Even though there are a lot of complexities and moving parts, by the time enrollment starts in the fourth quarter, we're certainly going to increase the number of kids covered. We're looking at 1 or 2 million additional children who will get new private dental coverage through small employer groups or exchanges."

But while millions more children will gain access to dental care, many of their parents will probably drop their own dental coverage, she added.

"Our studies show that when children's coverage is separated from their parents in the small group market, as many as half of the parents that are currently insured may drop their dental coverage for economic reasons," Ireland noted. "We're looking at potentially 10 to 12 million adults who may drop coverage because they can get their children covered separately. So they may decide to get their kids' teeth fixed instead. And studies show if adults don't have coverage, they don't go to the dentist as often."

What about insurance carriers?

From a dental insurer's perspective, the changes will probably move some of their customers from group plans to individual plans, according to Joanne Fontana, an actuary who tracks health insurance for the actuarial and consulting firm Milliman. This marks the first time there will be a need for pediatric-only plans, she pointed out.

"Some dental insurers aren't too anxious to jump into the individual marketplace," Fontana told DrBicuspid.com. "With the exchanges, you have an individual marketplace where people will be purchasing pediatric oral care, so insurers will be making sure they position themselves and their product so they can attract business. It's also important to understand that people on the exchanges may look a little different than the group of people that have historically been covered under employer-sponsored plans."

The kind of coverage employers will offer once the exchanges are in place remains to be seen, she added.

"I think dental is still viewed by employers as a value-added benefit, and you want to offer good benefit packages to your employees," Fontana said. "The broader issue is, are employers going to keep offering any kind of coverage, or are they going to say, 'Nope, go buy medical and dental coverage wherever you want.'"

The ACA provides subsidies for those with lower incomes (under 400% of poverty level) who opt for coverage in the exchanges, but only if an employer doesn't provide adequate coverage, Ireland pointed out.

"The exchanges are not a way for individual consumers to dump coverage provided through their employer and go on exchanges," she said.

Separate consumer cost-sharing limits for medical and dental plans will be applied to coverage purchased through the exchanges. Starting this year, annual out-of-pocket expenses for medical will be capped at $12,500 for a family of four and $6,250 for individuals, either for medical expenses only or when medical with dental coverage are included together in a policy. When dental is purchased separately, a "reasonable out-of-pocket limit" (OOP) is required under the proposed rules. The NADP has suggested $1,000 as a standard OOP limit, Ireland noted.

The rules set strong incentives for consumers to use dentists and medical providers who are in-network because OOP costs for out-of-network providers are not counted toward the consumer's OOP limits, she said.

Also, changes in orthodontic coverage provided through small employers will require a demonstration of medical necessity. Milliman estimated that only about 30% of orthodontic claims now meet that standard, Ireland said.

Notably, there will be no annual limits on children's dental coverage purchased through exchanges or small employers. But annual limits will remain in place for children's dental coverage purchased through large employer groups.

Consumers will more often take their children to a network dentist -- especially for orthodontia -- so that their out-of-pocket costs will count toward annual caps, Ireland said.

"We're certainly going to increase the number of children covered and that's the goal," Ireland noted. "The problem is that separating children from their parent's coverage could result in a shift in their choice of providers, and that could result in a net loss of adult coverage, so we could end up with a net loss of people covered for dental benefits -- which could translate into less dental demand."