You have probably heard of Direct Primary Care — the model where patients pay their physician a flat monthly fee for unlimited access, bypassing insurance entirely. It has grown from a fringe idea to a movement with thousands of practices nationwide. Now apply the same principle to dentistry. That is direct dental care, and it may be the most significant shift in how dental benefits work since the employer-sponsored dental plan was invented.
The core idea is straightforward: remove the insurance carrier from the middle of the transaction. Employers fund dental benefits directly. Employees use those funds to pay providers at the point of care. No claims to file. No networks to navigate. No waiting periods. No annual maximums. Just dental care, funded and delivered.
How Traditional Dental Insurance Actually Works
Before we can understand what direct dental care replaces, it helps to be specific about what the current model actually does. When an employer offers dental insurance, here is the flow of money: the employer pays a monthly premium to a dental insurance carrier. The carrier builds a network of providers who agree to discounted fee schedules. When an employee visits an in-network provider, the provider submits a claim. The carrier adjudicates the claim, applies the plan's rules — deductible, coinsurance, annual maximum, waiting periods, frequency limitations — and pays the provider a portion of the discounted fee. The patient pays the rest.
The annual maximum — typically $1,000 to $1,500 — caps what the carrier will pay per year. This number has not changed meaningfully since the 1970s.1 And between 25% and 40% of every premium dollar goes not to dental care but to administrative overhead: claims processing, network management, utilization review, and carrier profit.2
The system is complex by design. That complexity is the product.
The Direct Dental Care Model
Direct dental care strips away the intermediary layer. In its simplest form, it works like this: the employer allocates a dental benefit amount per employee — say $1,200 to $2,400 per year — into a dental wallet or HRA. The employee uses that balance to pay for dental care directly, at any provider they choose, at the provider's standard or negotiated rate. There are no claims to file. There are no networks to join. The money moves from employer to employee benefit account to provider, with technology handling the rails instead of an insurance carrier.
"Direct dental care is not a discount plan. It is not a stripped-down insurance product. It is a fundamentally different way to connect employer dollars to patient care."
The provider gets paid at the time of service, at a fair rate that they set — not a discounted fee schedule imposed by a carrier. The employee gets to choose any provider, including specialists, without worrying about network status. And the employer gets full transparency into how their benefit dollars are being used, without the opacity of insurance carrier reporting.
How It Compares: Side by Side
| Feature | Traditional Dental Insurance | Direct Dental Care |
|---|---|---|
| Annual maximum | $1,000–$1,500 (unchanged since 1973) | Employer sets the amount — no arbitrary cap |
| Network restrictions | In-network providers only for full benefits | Any licensed provider |
| Claims process | Provider submits claim, carrier adjudicates | Direct payment at point of care |
| Waiting periods | 6–12 months for major procedures | None — benefits available immediately |
| Admin overhead | 25–40% of premiums | Minimal — technology replaces carrier bureaucracy |
| Unused funds | Retained by carrier | Can roll over (employer-configurable) |
| Procedure restrictions | Frequency limits, downcoding, bundling | Clinician recommends, patient decides |
| Provider payment | Discounted fee, 30–60 day payment cycle | Fair market rate, paid at time of service |
How It Differs from Dental Discount Plans
It is important to distinguish direct dental care from dental discount plans, which are sometimes marketed as an insurance alternative. A discount plan gives members access to a network of providers who offer reduced fees — typically 10% to 60% off their standard rates. The member pays the discounted price out of pocket. There is no employer funding, no benefit account, and no coverage in any real sense. It is a coupon book.
Direct dental care is fundamentally different. The employer is putting real money into the benefit. Employees have a funded balance that they can use for dental care. The provider is being paid — not at a discount, but at a fair rate. The economic structure is employer-funded care delivery, not consumer-purchased access to lower prices.
The Economics: Where the Money Goes
The financial case for direct dental care is built on a simple observation: if 25% to 40% of every dental premium dollar goes to administrative overhead,2 then removing the carrier removes a significant portion of that overhead. The employer's dental spend goes further because more of it reaches the provider.
For employers, the math is compelling. Consider a company spending $50 per employee per month on dental insurance premiums. Over a year, that is $600 per employee. If 30% of that goes to carrier overhead, only $420 is potentially available for care — and even that is subject to deductibles, coinsurance, and the annual maximum. With direct dental care, the employer could put $600 into a dental wallet and know that the full amount is available for actual dental treatment. Same spend, more care.
For providers, the benefits are equally tangible. Insurance administration consumes meaningful overhead at the practice level: verifying eligibility, submitting claims, following up on denials, managing write-offs from discounted fee schedules. When a patient pays directly, the provider receives fair compensation at the time of service. The administrative burden shrinks. The payment is immediate. The relationship between provider and patient is direct, unmediated by a carrier's rules about what is covered and what is not.
For employees, the experience is simpler and more empowering. They see their benefit balance. They choose their provider. They get the care their clinician recommends, not the care their plan approves. And because there is no annual maximum in the traditional sense — the benefit is the full funded amount — a single crown does not consume their entire year's benefit.
Who It Is Built For
Direct dental care is particularly well-suited for small to mid-size employers — companies with 5 to 500 employees — who want to offer real dental benefits without the complexity and cost of traditional group dental insurance. These organizations often face a difficult choice: buy an expensive group dental plan with limited coverage, or offer nothing.
Direct dental care provides a third option. It is simpler to administer than a traditional plan. It is more transparent. It delivers more value per dollar. And it signals to employees that the company takes their health seriously enough to fund care directly, rather than purchasing a product that was designed to limit it.
It also works well for companies that already offer dental insurance but are frustrated with the value equation. Stacking a dental wallet alongside a traditional plan, or replacing the traditional plan entirely, are both viable approaches depending on the employer's situation and goals.
The Regulatory Framework
Direct dental care typically operates under a Section 213(d) Health Reimbursement Arrangement (HRA) structure. Under this framework, employer contributions to dental wallets are tax-deductible for the employer and tax-free for the employee — the same tax treatment as traditional health insurance premiums.3 This is not a workaround or a gray area. HRAs are a well-established, IRS-recognized benefit vehicle that has been used for decades in medical benefits.
The key regulatory advantage is simplicity. Because the employer is funding an account rather than purchasing an insurance product, many of the regulatory requirements that apply to group health insurance — state insurance mandates, carrier filings, rate approvals — do not apply. The employer retains control over benefit design while staying within a clear, established legal framework.
What Comes Next
The direct care movement in dentistry is still early. Most employers have not heard of the model, and the infrastructure to support it at scale is just now being built. But the trajectory is clear.
The research is unambiguous that oral health and systemic health are deeply connected. People with untreated periodontal disease face 12% to 14% higher overall healthcare costs, particularly those managing chronic conditions like diabetes and cardiovascular disease.4 When 46% of Americans are skipping dental care due to cost,5 that is not just a dental problem — it is a medical cost problem. Employers who fund dental care directly are not just offering a benefit. They are making a downstream investment in lower overall healthcare costs.
As more employers recognize that a quarter to nearly half of their dental spend is going to administrative overhead rather than care, the question shifts from "Why would we try something new?" to "Why are we still paying for the old model?"
The answer, increasingly, is that they do not have to.
If you are an employer exploring alternatives to traditional dental insurance, learn how Toothsome can help. If you are a provider interested in direct payment models, see what working with Toothsome looks like.
For context on why the traditional model has stayed frozen for so long, read: Why Dental Insurance Hasn't Changed in 50 Years.