Many people look to their local AAA Auto Club for direct routes to wherever they need to go, particularly as they venture off the beaten track toward scenic small towns. The beautiful locations that are such a pleasure to travelers, though, posed a distinct challenge to AAA Ohio Auto Club's dental plan. Headquartered in Worthington, Ohio, AAA Ohio Auto Club has 39 locations throughout the state. "Dentists in the previous plan weren't always convenient to the AAA Ohio Auto Club offices," explains Linda Ulrey, the company's director of human resources. As a result, only 50 of the company's 750 employees were enrolled in the plan.
With the help of the company's insurance broker, Ulrey investigated the dental benefits market. The broker suggested a self-funded direct reimbursement plan supported by the American Dental Association. The new plan took effect on January 1, 2000.
Here's how direct reimbursement (DR) works: With a DR plan in place, an employee visits the dentist of his or her choice, receives treatment and arranges for payment, and then later presents a paid receipt or proof of treatment to the employer or plan administrator for reimbursement.
Unlike most traditional insurance plans, DR reimburses employees on the basis of dollars spent on dental care, not the type of treatment received. Plan design varies according to a company's budget so that costs can remain under a company's control. Moreover, there are no predetermination or pre-authorization requirements, no "usual, customary, and reasonable (UCR)" fees, and typically no deductibles. By leaving all treatment decisions to dentists and patients, DR frees employers from employee complaints about limitations, exclusions, and hidden costs.
DR lets companies design their own dental plans, set individual or family maximums, and specify the percentage of expenses to be reimbursed. The AAA Ohio Auto Club, for example, reimburses its employees 100 percent of the first $100 of expenses, 70 percent of the next $100, and 50 percent of the next $1,660, for a maximum benefit of $1,000. An employer can choose any level of financial commitment initially and later revise the benefit levels according to experience and the company's changing needs.
Now AAA Ohio Auto Club's employees choose any dentist they want, no matter where they're located. When employees are treated, they simply pay the dentist's bill and then deliver the receipt to the company's plan administrator. "In our case, it's a very quick turnaround," Ulrey says, "with most reimbursement in under two weeks."
The plan has been economical for the company, too. Most employees don't use all the funds allocated, which is typical of most dental consumers. "We come in under budget," Ulrey reports happily.
"Employees really love the plan," she adds. "They know exactly what they'll get back, so they can plan their dental treatments accordingly." Not surprisingly, enrollment in the dental plan is more than eight times greater than the company's previous plan enrollment. For AAA Ohio Auto Club's employees, a direct route to dental care has never been clearer.