Question 1

Employer group dental expense plans limit annual benefits in an attempt to MINIMIZE adverse selection.

Limiting annual benefits in employer group dental expense plans is primarily aimed at reducing adverse selection, where individuals with higher health risks are more likely to enroll in the plans, leading to increased costs for insurers.

A) adverse selection

This option is correct as it directly addresses the primary concern of insurance companies when offering group dental plans. By limiting annual benefits, insurers can mitigate the risk of attracting a disproportionate number of high-risk individuals who might otherwise lead to unsustainable claims costs.

B) combination plans

This option is incorrect because combination plans refer to insurance plans that cover multiple types of services or treatments. The limitation of annual benefits does not specifically relate to the concept of combination plans, making this choice irrelevant to the question.

C) the overall deductible

This option is incorrect as it pertains to the amount that an insured must pay out-of-pocket before the insurance benefits kick in. While deductibles are an important aspect of insurance plans, limiting annual benefits does not aim to minimize or directly influence overall deductibles.

D) coordination of benefits

This option is incorrect because coordination of benefits involves the rules determining which insurance plan pays first when an individual is covered by multiple plans. Limiting annual benefits is not a strategy to address coordination of benefits, thus making this option unrelated to the question.

Conclusion

The focus on minimizing adverse selection is crucial for the sustainability of employer group dental plans, as it directly impacts the financial viability of the insurance offerings. Other options such as combination plans, overall deductibles, and coordination of benefits do not align with the objective of limiting annual benefits to control risk, further validating that A is the definitive correct choice.