Employer group dental plans may attempt to minimize adverse selection by utilizing all of the following EXCEPT

• A. deductibles
• B. probationary periods
• C. coinsurances
• D. encouragement of reduction in employee participation

Answer: (D)

In employer group plans, keeping a large and diverse pool of participants is key to avoiding adverse selection, where the plan ends up concentrating costs among a small, high-need group. Design features that raise members’ cost or delay their eligibility help achieve a more balanced pool by reducing enrollment of individuals who would join primarily to gain coverage without sharing costs or who would join only briefly to get benefits. Deductibles and coinsurance shift more of the cost to the insured, which can dampen enrollment from those less committed to ongoing coverage. Probationary periods prevent new hires from gaining immediate coverage, limiting enrollment that could be driven by short-term needs or by people who anticipate high future costs.

Encouraging a reduction in employee participation would undermine this balance by shrinking the risk pool, which tends to increase costs for everyone and undermine stability. Maintaining broad participation is the goal, so this option does not fit as a method to minimize adverse selection.