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California dental benefits plans asked to issue partial premium refunds due to their 'substantial net profits'

October 14, 2020 2249

Quick Summary:

The Oct. 7 notice affects at least 55 dental benefits insurers covering approximately 4 million lives. Insurance companies have flexibility in how they comply with the commissioner’s request: They can provide a premium credit, reduction or other appropriate premium adjustment.

California Insurance Commissioner Ricardo Lara last Wednesday issued a notice to California health insurance and specialized health insurance companies, including 55 dental benefits companies, requesting that they “provide their policyholders with a partial premium refund no later than December 31, 2020, due to the “substantial net profits” the companies made, and continue to make, as a result of consumers’ underutilization of health care services during the state’s COVID-19 economic shutdown.

CDA has prioritized advocating for increased dental plan accountability in 2020, particularly following the statewide and local public health stay-at-home orders that took effect in mid-March to slow the spread of the coronavirus. For over two months, dental practices across the state were open for emergency dental treatment only, which left consumers unable to receive routine and preventive care. In some counties with stricter stay-home mandates, practices were slower to resume providing nonemergency care.

Even now, as dental practices in the state are recovering, the vast majority are not at full capacity. Several compounding factors are causing the lag in recovery, including increased requirements for infection control, new patient-flow protocols, reduced staff availability and consumers’ ongoing reservations. CDA’s latest consumer research study released Sept. 10 shows that while most patients felt comfortable returning to the dentist, 12% who said they had a dental appointment scheduled within six months said they planned to reschedule the appointment, 6% hadn’t decided whether to keep it and 2% said they planned to cancel.

Plans can provide premium credit, reduction or other adjustment

The California Department of Insurance does not regulate all dental benefits plans, but the Oct. 7 notice does affect at least 55 dental benefits insurers ― particularly their PPO products ― covering approximately 4 million lives. 

Insurance companies have flexibility in how they comply with the commissioner’s request: They can provide a premium credit, reduction or other appropriate premium adjustment.

And the notice states that dental benefits plans that have a maximum annual benefit can instead comply with the refund request by increasing the covered person’s 2021 maximum annual benefit by a percentage reflecting the period during which covered services were not available in 2020. “For example, as dental practices were essentially closed for a calendar quarter of 2020, each insured’s 2021 maximum benefit would be increased by at least 25 percent,” the notice states.

CDA continues to urge DMHC to pursue similar refund

Extending the annual benefit into 2021 was a top goal for CDA this year. CDA initially pursued legislation but changed its strategy to request that dental plan regulators, the Department of Insurance and the Department of Managed Health Care press for a consumer refund of the type the insurance commissioner issued last week.

As a result of CDA’s advocacy and the insurance commissioner’s notice, many patients who were forced to delay dental care and might not be able to get into their dentist’s office before the end of the calendar year may be able to use additional coverage for dental care in 2021.

The commissioner’s notice asks that all insurance companies subject to the notice report actions they have taken or plan to take within 45 days of the notice. 

CDA will continue to urge the Department of Managed Health Care to pursue a similar premium refund and will also continue to advocate that major dental plans provide a meaningful per-patient supplemental payment for PPE through the end of 2021.