Ripple Effects of Dental Loss Ratio Requirements Harm Brokers and Agents

By Mike Adelberg, NADP Executive Director

When the Affordable Care Act was passed in 2009, it included a medical loss ratio (MLR) provision requiring health plans to spend at least 85 percent (80 percent in some markets) of premium revenue on paying claims, with the remaining 15/20 percent allowed to be spent on administrative functions.

Despite Congress’s decision not to apply MLR requirements to dental plans because of the significant differences between medical and dental plans, there has been a recent push to establish a MLR for dental plans. Proponents suggest this in pursuit of transparency and added value for consumers; though an underlying belief that higher MLR leads to increased provider payments clearly is a motivation.

In 2022, Massachusetts passed an 83 percent loss ratio for dental plans by public ballot, causing at least seven dental plans to exit one or more insurance markets and other plans to lessen and even zero-out broker commissions. Many other states have introduced similar bills over the last three years but declined to pass them. In 2025, North Dakota enacted a dental loss ratio (DLR) percentage mandate, establishing a 75 percent requirement for all dental plans effective January 2027.

With legislative sessions starting this month, there likely will be new DLR bills introduced. If enacted at a Massachusetts-like level, these bills will have negative impacts on dental plan provider and member services, and even plan viability in certain markets. As I’ve written before, imposing an arbitrarily high DLR on dental plans will result in higher premiums, patient coverage disruptions, and loss of coverage options.

An important stakeholder in this policy debate has been, in many states, absent from the discussion—the agents and brokers who sell dental insurance to employers and consumers.

Why DLR matters for dental benefits agents and brokers

Arbitrarily high DLR impacts the agents and brokers who sell dental insurance for many reasons. Most notably,

• Reduced compensation: Arbitrarily high DLR squeezes administrative costs (even essential administrative costs such as answering phone calls and adjudicating appeals) and squeezes funds available to commissions to agents and brokers. Plans may be forced to reduce agent and broker commission rates or shift from percentage-based commissions to flat fees, resulting in lower earnings.

A study of Massachusetts dental plan rate filings for 2025, conducted by Charm Economics for NADP, found that many plans included a note in their filing that commissions for brokers were below the typical 10% commission for dental products. On average, commissions were lowered to 5% for those plans providing this information.

• Changes to plan pricing and availability: Arbitrarily high DLR “shocks” the insurance market. Dental insurers will sunset plans that are difficult to price within DLR limits. This creates churn in the market, disturbs established relationships, and reduces the number of plans brokers and agents can offer.

In a series of interviews with small businesses in Massachusetts conducted by research firm, ANR for NADP, several respondents indicated either their dental plan had been discontinued or their carrier was no longer offering dental plans to organizations of their size. Many of those firms were limited to finding plans with lower benefit levels, smaller provider networks or higher costs for the employer or employee.

• Increased administrative requirements: Insurers may require brokers to provide more documentation during enrollment or follow standardized quoting and sales processes to ensure accurate reporting to verify they are meeting DLR requirements. This means more paperwork and compliance steps for brokers.
• Market shifts: DLR regulations could accelerate a move away from fully-insured dental products toward self-funded arrangements, which are not subject to state-level DLR regulations. This shift could further affect the business of agents and brokers who rely on commissions from fully-insured plans.

NADP and Brokers and Agents can work together

We encourage the broker and agent community to work with the NADP and its member plans to support more reasonable alternatives to DLR percentage requirements, such as reporting laws in place in several states, and the gradual approach endorsed in model legislation by the National Council of Insurance Legislators (NCOIL). The model provides a framework for DLR regulatory reporting and allows state insurance regulators to identify outlier plans and steer those plans to loss ratios more common in the state. Adopted in Montana in 2025, this model avoids the market shocks we’ve seen in Massachusetts.

Together, dental insurers and the agent/broker community can work toward common-sense solutions for DLR (and other issues). We’ll be calling on you soon.