In 2025, a growing number of employers are walking away from traditional dental insurance. Rising administrative costs, limited access to care, and a lack of transparency are pushing organizations to explore more flexible, cost-effective alternatives that better meet the needs of both employees and providers. Here are three key statistics that explain why the shift is happening and what smarter dental benefit options are replacing the outdated insurance model.
1. Up to 40% of dental plan costs go toward administrative and PEPM fees – not patient care
One of the most frustrating aspects of traditional dental insurance is the high administrative overhead. Between Per Employee Per Month (PEPM) fees, Administrative Services Only (ASO) fees, claims processing costs, and broker commissions, a large percentage of employer spend never actually goes toward dental treatment.
According to data from the National Association of Dental Plans (NADP), 25% to 40% of dental plan costs are consumed by non-clinical administrative expenses. That’s money that could otherwise go directly toward improving access, care quality, or employee satisfaction.
2. Only 1 in 3 dentists still participate in major dental networks like Delta Dental
Access to care is another major issue. A 2024 ADA Health Policy Institute survey found that only 32% of dentists are currently contracted with at least one major PPO dental network, down significantly from previous years.
Dentists are increasingly opting out of networks due to low reimbursement rates, delayed payments, and restrictive treatment limitations. For employers, this creates a frustrating reality: employees technically have coverage, but struggle to find high-quality in-network providers, especially in rural or underserved areas. This erosion of network strength directly impacts employees’ ability to receive timely, affordable care and undermines the value of the benefit altogether.
3. Fewer than 10% of dental plans offer transparency into provider quality
While medical plans have made strides in publishing provider ratings, quality scores, and patient satisfaction metrics, the dental insurance space remains largely opaque.
A 2023 analysis published in the Journal of Dental Insurance and Benefits found that fewer than 10% of dental plans provide any public data on provider quality. Among the few that do, many rely on third-party solutions such as DentaQual, yet these tools provide minimal value. For example, the majority of dentists receive similar ratings, typically four out of five stars, offering little practical guidance for consumers trying to identify top-performing providers. Some experts suggest insurers use these tools more to satisfy employer expectations than to help patients make informed choices. In short, traditional dental insurance doesn’t just fall short on access and cost – it also fails to offer the information needed to make smart, informed decisions.
What Are Employers Doing Instead?
Faced with these challenges, employers are increasingly rethinking the role of dental insurance entirely and exploring a range of alternative approaches that provide more flexibility, transparency, and value. Here are a few emerging strategies:
Dental Savings or Membership Programs
These plans allow employees to receive discounted services directly from participating dentists without the limitations of insurance.
- Employers and/or employees are able to fund a membership plan in multiple ways.
- Dentists earn more while patients receive transparent pricing and access to procedures which aren’t typically covered by traditional insurance (ex. teeth whitening)
- No claims, no PEPM fees, and lower overall cost for employers
FSA and HSA-Compatible Benefits
Some employers are shifting toward consumer-directed options, such as:
- Flexible Spending Accounts (FSAs) – Allow employees to set aside pre-tax dollars for dental care expenses
- Health Savings Accounts (HSAs) – For high-deductible health plans, HSAs can be used to cover a wide range of dental services
When paired with discount programs, FSAs and HSAs give employees greater control over their dental spending without locking employers into high-overhead insurance contracts.
Direct-to-Provider Reimbursement Models
A growing number of employers are piloting models where they contract directly with local dentists or offer reimbursement-style dental stipends that:
- Let employees choose their own provider
- Pay a portion of out-of-pocket expenses directly
- Encourage high-quality care by focusing on outcomes, not just coverage
This model avoids many of the limitations and frustrations of traditional networks while still offering valuable dental benefits.
Final Thoughts
Traditional dental insurance is no longer the gold standard for employer-sponsored dental benefits. Between rising administrative costs, shrinking provider networks, and lack of transparency, more employers are seeking alternative solutions that improve employee satisfaction and access to care.
Whether it’s through dental savings/membership programs, FSA/HSA integration, or direct care models, the shift is underway, and 2025 is shaping up to be a tipping point.
Interested in designing a smarter, dentist-friendly dental benefit for your organization? Contact Dr. Kyle Gernhofer at kyle@denscore.com to learn how DntlDirect is partnering with high-quality dental providers to provide employers with a more affordable and employee-friendly dental benefit solution.
