Insurance Broker Blog

What is EDI and Why Dental Insurance Brokers Should Care


What is EDI and why should you, a dental insurance broker, care? It's an abbreviation for Electronic Data Interchange, which is a computer to computer exchange of standard business documents. It is the way many businesses today send or exchange documents such as purchase orders, invoices, payments and other types of documents. This electronic mailing system, helps to create the sought-after paperless environment many businesses are seeking. You should care because many of your groups use this method to exchange business documents and the number is growing. Understanding how it works and its advantages will help you gain trust with your groups and give you the opportunity to recommend a benefits resource that is fast, accurate, secure and inexpensive.

How does EDI work in the dental insurance world?

The use of this method of exchanging business documents between a group and a dental insurance carrier would involve the group, for example, sending over eligibility and enrollment information using this method. That data is organized based on a standard format that has been set by both the carrier and the group. Typically, the eligibility and enrollment information includes:

  • Name
  • Date of Birth
  • Social Security Number
  • Plan Choice

Using the data  they receive from groups, insurance carriers are then able to do things like create and send out ID cards to members and update employee information. 

So, what are the advantages of using EDI?

It’s safer. The information being sent from groups includes sensitive information, such as an employee’s social security number and date of birth. Using this mode of delivery ensures safety of the information being exchanged. One reason is that the electronic data is encrypted. Therefore, only the intended recipient will be able to read the information.

It’s accurate.  Electronic data interchange involves a business transaction directly from one computer to the next; there’s no human involvement in this exchange. Therefore, the chance of a mistake is removed.  Consider if a group used paper enrollment forms. An employee at the insurance company would have to manually input the data from all the forms. The bottom-line is that people aren’t machines. They make mistakes.

It’s faster.  Previously, businesses relied on postal services to send information to each other. Once the sender mails out the information, the recipient must then wait for it to arrive.  This naturally results in delays. And don’t let it be a national holiday; this only delays things more. On the contrary, this interchange of data occurs as quickly as you can send a fax or an email. And you can send or receive information 365 days of the year. 

It’s inexpensive.  Businesses that use this technology don’t have to go through a third party and pay to mail business documents; they simply utilize the internet or telephone lines, resources they are already paying for; therefore, they save money. Sending business documents the old fashioned way is costly because organizations must utilize a third party and pay to send their documents by land or air.   

What are the advantages of EDI for you?

Understanding this delivery system and its benefits, allows you to become a great resource to your groups that are contemplating transitioning to this system. You will be equipped to explain what electronic data interchange is and the advantages of switching to this system. For your groups that are already using this method, two things: You are able to quickly get that group’s information over to the insurance company and have the members loaded and ready to go during open enrollment; you are also able to get more groups enrolled in a shorter period of time. That’s called outstanding customer service. 


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