Four Simple Rules for Controlling Risks and Costs
Companies often offer their employees discounts on their products, and this much-appreciated benefit tends to lower turnover and increase employee satisfaction. But how do dental and medical offices give their employees an in-house treatment benefit without running afoul of employment and labor laws? Additionally, many doctors are providing discounts in a way that might be jeopardizing your provider status with insurers, and many also overlook the costs associated with providing free or reduced rate services, which can have a profound effect on your bottom line. Today, we’ll go over some key points to consider when crafting your Family Dental/Medical Benefits policy.
- You must pay your employees to perform services.
- You must give insurance the benefit as well.
- You should define who is eligible.
- You should put a cap on it.
Hosting an “Employee and Family Day,” where employees and their families receive free or reduced cost services, can be a great idea IF you follow the rules. Anytime an employee is performing their job under your direction, you must compensate them. Failing to do so could easily lead to a wage claim with the Department of Labor and a lot of trouble. So, employees performing services to care for other employees or their families must be on the clock.
Note that even if your office uses differential rates of pay, if the employee is doing what would normally be considered “production” work, you must pay them at their “production” rate. You can have the employee who is being treated clock out (in fact, you should require them to clock out).
Key takeaway: If your employee is performing services typical to their job, you must pay them for that time, no matter on whom they are performing those services.
When an employee also has insurance, you may be tempted to charge the full rate to the insurance company and apply the discount only towards what the employee owes, but you cannot do this. Applying the discount only to the employee’s portion likely breaches your network access plan (NAP) contract and may qualify as fraud. We recommend that you simply apply the employee benefit discount before you charge the insurance. Note that even if you offer free services, you must also give them to the insurance company for free.
One exception is lab fees and other unusual expenses. Provided that you state that they are not covered by the employee family benefit, you can charge the cost to insurance just as you would for any other patient. As long as the insurance gets any discounts you are offering too, your office shouldn’t be exposed to any allegations of breach of contract or fraud.
Key takeaway: Apply the discount before charging the insurance company.
Who is considered family varies from employee to employee. So, you want to specify who is eligible or you may wind up treating a third cousin twice removed for free. We recommend that you specifically define “immediate family” in your policy and spell out who is included (i.e. spouse or domestic partner, and children). If you would like to expand that definition, you may, but once you have a rule in place, avoid using your discretion to make exceptions. The more you stick to your own policy, the more you will be able to defend any claim of discrimination.
Key takeaway: Clearly define who is eligible, and stick to that policy.
Your services are valuable. Since you must pay your employees for performing those services, pay for the equipment and supplies that you use, and lose out on scheduling paying patients during that time, the costs to your practice for performing free or reduced cost services can quickly add up! Setting a cap on the dollar amount of such services is therefore highly recommended. This not only controls costs, it evens the benefit out over all employees, so there is no potential for a discrimination claim.
The maximum annual dollar amount should be defined in your policy; it can be as much or as little as you decide. Most fall between $1000 and $4000 in annual benefits, depending on your type of practice. Most policies exclude lab and other third-party fees or costs from the benefit, so no one expects your practice to cover them. These costs should be paid by the employee at the time of service, or arranged with written payment terms, just as you would for a patient.
Key takeaway: Having a specific dollar amount cap and excluding lab fees in your policy helps controls costs and liability.
In summary, remember these four things
Employee dental/medical benefits can make your employees shining examples of your superior services and help improve morale, as long as you pay attention to all of the following:
– You must pay employees to work on other employees and their families,
– You need to give the insurance company the discount as well,
– You want a carefully crafted policy specifying who is eligible for the benefit, and
– You should state a dollar amount cap, to make sure it doesn’t affect your bottom line.
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