What is a Dental Reimbursement Arrangement?
A DRA is an arrangement that employers set up and completely fund to cover certain out of pocket, co-pays, co-insurance, and/or deductible expenses employees may incur associated with their dental expenses. It is an arrangement that employers promise to pay certain expenses on behalf of the employee to help reduce their cost of dental expenses, for themselves, their spouse, and dependent children.
Why Would A Company Consider A DRA?
Companies consider implementing a DRA as a way to reduce the cost of dental insurance premiums. By self insuring the dental plan, the premium to purchase a dental plan may be reduced considerably.
How Does A DRA Work?
A DRA is designed to take the place of a company offering a fully insured dental plan. Traditional dental insurance plans have low co-pays, low co-insurance, and/or low deductibles, but for the most part you could be paying more in premiums then the actual benefit received. By implementing a DRA employers may be able to reduce their cost in providing the coverage. DRA’s are effective in managing employees’ dental expenses, but employees will be required to submit receipts or understand how to get reimbursed for an eligible expense covered by the DRA.
Should An Employer Outsource The Administration?
There are many factors to consider when deciding to outsource the administration of DRA’S. Though pricing is important, it isn’t the only consideration to focus on. The employees will be submitting their claims for dental expenses, and all of their personal information of what they had done will be on the letter. Many employees will find this information private and may not want it shared with their employers. By outsourcing, the employer can get the claims paid, and the employee can rest assured that their information is kept confidential. It is also important to consider a Third Party Administrator who is setup for paying these types of claims. Employees are going to need an efficient streamlined process to receive their deductible money. Failure to reimburse an employee expediently could result in the employee receiving additional charges from their provider. Employers should consider using a TPA who can offer debit card processing for reimbursing the DRA expenses. This would allow the employee to pay for their expenses directly to the provider without having to submit claims for reimbursement.