Blog

Businesses use benefit plans to attract and retain top talent. Offering dental coverage for employees and their families is vital to remain competitive, but costs continue to rise for employers. Each province has a dental association that sets their fee guide for the year. In recent years, these costs have grown, leading to higher claims and increases in premium or funding levels at renewal. The government of Canada has announced a federal dental plan with the goal of covering all uninsured Canadians earning under $90,000/year of family income by 2025. This program is starting in 2023 for uninsured Canadians under 18, persons with disabilities, and seniors within the income requirements. This plan won’t help reduce dental premiums for employers as the plan only pays to uninsured individuals. Employers should continue covering their staff for dental to remain competitive in the talent pool. If the federal dental plan expands its limits enough, employers may choose to focus their benefit dollars towards other employee compensation in the coming years. Over the last five years the dental fee guide has increased, with the largest jump coming in 2023. Dental services are billed at 20%+ more than five years ago, leading to claims rising and higher costs for employers. Here is the average increase in cost of services offered for Ontario over the last five years: 2023 Ontario Average Increase: 8.5% 2022 Ontario Average Increase: 4.75% 2021 Ontario Average Increase: 4.6% 2020 Ontario Average Increase: 1.27% 2019 Ontario Average Increase: 4.19% As prices continue to rise, it’s essential for businesses to use a cost-effective solution for their benefits package. One option is to self-insure the dental portion of your plan (called ASO or Administrative Services Only). There is no catastrophic risk associated with dental, as plan limits, such as $1,500/year per member, are set in the plan design. ASO essentially works as a pay-as-you-go system. Rather than setting a Single/Family premium rate for the year, you only pay claims, adjudication fees and taxes. Compared to an experience rated dental benefit, built-in fees can be significantly cheaper on an ASO platform. Another cost-effective solution, without self-insuring the dental benefit, is to use HMA’s 3G profit-sharing plan. This plan uses the same renewal calculations as any experience rated health and dental plan, but gives back the profit an insurance company would normally receive when claims come in lower than the expected Target Loss Ratio (TLR). For example, if your TLR is 75% and you pay $10,000 as a dental premium for the year, you are expected to claim $7,500. If claims come in below the $7,500 you can receive the difference back through the plan’s profit sharing and loyalty dividends. While higher dental costs are inevitable with the raises to the Fee Guide, using one of the solutions above can help mitigate some of the costs. Your broker should be bringing solutions to the table. Send us a message today for a full no-pressure review of your benefits plan.