After a business has decided to acquire group dental insurance, they must make more detailed decisions. It can be challenging to find the best plan for an organization that meets its unique requirements, budget, and the needs of their employees. Before making a choice, it is important to understand the terms that you may come across, such as MAC and UCR dental.
When an employee chooses a health care provider that is not part of their insurance plan’s provider network, the patient may be responsible for a higher percentage of the final bill because out-of-network providers do not have a fee arrangement with the insurance company. This means that the insurer’s payments for covered out-of-network services will be based on either MAC (Maximum Allowed Charge) or UCR (Usual, Customary and Reasonable) rates.
What Are MAC Dental Plans?
MAC plans are the most common dental plans available. Also referred to as Preferred Provider Organization (PPO) fee plans, MAC earned its name based on how payments are calculated to the dentist. With a MAC plan, the insurance company’s reimbursement schedule to the dentist has a cap that limits the maximum allowable charge. This cap is set regardless of geography. Rates charged for each procedure are negotiated between the insurance company and the insurer’s in-network dental providers. If a member chooses to see an out-of-network provider for treatment, these negotiated in-network fees are used to determine the reimbursement amount.
There are many reasons why MAC dental plans have become more appealing in recent years. One of the biggest reasons is the low premiums that MAC dental plans offer compared to UCR options. MAC dental plans can be helpful for members that would prefer to stick with their out-of-network healthcare provider, even if this means higher costs. Note that MAC dental plans often come with waiting periods so be aware of the unique terms of the plan before choosing one for your employees.
Pros & Cons of MAC Plans
MAC dental plans come with both advantages and disadvantages. These plans often come with the lowest out-of-pocket costs due to reduced fees agreed to by PPO providers. Depending on your location, your employees will also have access to thousands of providers across the state. When visiting an out-of-network healthcare provider, members are able to receive benefits based on a PPO fee schedule and will have access to a licensed health care provider of their choice. This can be highly advantageous for members who are comfortable with their current provider or have limited access to specialists in your area.
While there are many benefits that come with choosing a MAC plan for your business, there may be certain disadvantages. Members who choose to visit an out-of-network health care provider may have higher out-of-pocket costs. For members that suffer from chronic health conditions, frequent office visits may result in greater out-of-pocket costs.
What Are UCR Dental Plans
Some dental plans may refer to the words “Usual, Customary and Reasonable” to outline the percentage of the dental treatment fee that will be paid out for a particular treatment or procedure. UCR can be broken down into three main concepts. First, usual fees refer to fees that are determined by the dentist. Fees that an insurance company determines to be customary may actually be lower than the reasonable fees for the same treatment. Customary fee schedules can vary considerably among plans, even if the plans operate in the same general area.
UCR percentages are based on benchmark data that has been gathered by a third party. In some cases, an insurance company will calculate its own claims data for certain treatments or procedures within a geographic area. If 80 percent of dentists in your area charge $1,000 for a root canal procedure, that will be the UCR rate. One of the facets that make UCR dental plans unique is their lack of transparency which can make these plans arbitrary. UCR dental plans can result in disadvantages for both dentists and patients.
Pros & Cons of UCR Plans
Like MAC dental plans, UCR dental plans can offer a wide range of benefits. These plans usually offer one of three fee schedules: 90th, 80th or 70th percent. This number reflects the amount a dental carrier will reimburse the dentist. One benefit of choosing UCR plans is that the reimbursement fee will typically be equal to or greater than the amount that the dentist will charge, resulting in lower out-of-pocket fees for members.
The downside of UCR dental plans is that they can vary considerably depending on your location. UCR fee levels differ from state to state and what one person pays for a dental procedure in a different location may be considerably lower than what another person pays in a different location. Before choosing a UCR plan, it is important to understand the geographic differences in UCR fees and determine what fees will be applicable in your area.
How to Choose Between the Two
Dental PPO plans offer members the opportunity to visit both in- and out-of-network providers which allows members more control over their health. However, there are pros and cons to consider before choosing a dental plan for your organization. In short, you have two main options. You can upgrade your plan and opt for a higher UCR or downgrade your plan and save money on premiums. There are a number of factors to consider when making your decision, such as whether or not your employees are likely to choose out-of-network providers.
Speak to the Experienced Employee Benefits Consultants
An experienced benefits consultant can guide you in the right direction by explaining each option and weighing the pros and cons. For more information about MAC and UCR dental plans, contact the employee benefits experts at Business Benefits Group today.