Thursday, July 11, 2013

So You Think Dental Insurance Is Better Than A Dental Plan… Think Again!

Many people have the misconception that dental insurance is the only way to go and that discount dental plans are a rip-off.   The fact of the matter is dental insurance is the possibly the worst type of insurance to buy.

The only advantage that dental insurance has is, for the most part, you can go to any dentist that you want to.  Beyond that, the main thing you are really buying is peace of mind.  Keep in mind that insurance companies are gambling that during a calendar year you won’t use your insurance.  If the claim to income ratio passes a set point, you may see a rise in annual premium or an adjustment in benefits.

The vast majority of dental insurance is provided through group policies.  According to NADP (National Association of Dental Plans) estimates, annual premiums ranged from $234 to $432 per person in 2011.  If you’re an individual purchasing dental insurance, your policy would average about $360 a year.  Another thing that can affect your annual premium is the “ceiling” or maximum yearly benefit.  Ceilings can range from $750 to $2,500 with an industry average of $1.500.  If you need the higher ceiling, your annual premium will be higher.  Keep in mind that once you exceed your ceiling for the year your dental insurance benefits end until the start of the next year.

Most dental insurance emphasizes prevention and diagnostics.  They usually cover two annual examinations, cleanings and x-rays (x-ray are usually once every three to five years).  Most insurance companies have what is described as a 100-80-50 coverage, meaning they pay 100 percent for routine preventative care such as checkups and cleanings; 80 percent for basic procedures such as fillings, some extractions, and some root canals; and 50 percent for major procedures such as crowns, bridges, dentures.

Although preventative care is covered immediately, there is usually a three to six month waiting period for basic procedures and twelve to eighteen month waiting period for major procedures.

According to the American Dental Association in 2011 the average cost of two exams and cleanings and a set of X-rays would have about $370 if you paid out of your own pocket. 

Discount Dental Plans have a big advantage over dental insurance.  Dental plans have a set fee schedule that the dental facility is under contract to abide by.  As long as you stay within the provider network of the dental plan you should never pay more than the fee that has been set.  This means that the dental facility cannot bill you for the difference between their usual fee and the agreed fee.

Most dental plans have a fee schedule that discounts fee between thirty and fifty percent based on an average of the “normal” fees for the state that they operate in.  Since dental plans do not pay claims the annual cost of plan membership is usually significantly less expensive than dental insurance.  Individual plans average under $100 per year and family plans average under $200 per year.  Some dental plans offer employer and group rates that can be as low as $20 per year per member for large groups.

As a rule of thumb, dental plans do not have waiting periods.  When you become a member of the dental plan you can start using your benefits within one or two days if not immediately. Since dental plans are not insurance companies, the dental facility does not have to waste time and resources getting “permission” to perform different procedures.  Your dental care is strictly between you and your dentist and is based solely on your needs and your budget.  Since dental plans do not pay claims, there are no yearly ceilings.  This means that you don’t have to worry about your benefits ending before the work you are having done is complete. 

The biggest issue I have seen with people joining dental plans is that they are restricted to a “network” of providers.  Keep in mind that there are three types of dental insurance and two of them, Health Maintenance Organizations (HMO) and Preferred Provider Organizations (PPO) restrict you to their “network” of provider.  The only insurance that gives you free choice of dental facilities is Dental Indemnity Insurance and it’s the most costly.

When you are considering dental coverage take a close look at what you are paying for.  How long do you have to wait before something is covered, what’s the deductible, what’s my copay and most importantly what is my yearly premium and ceiling?  If you are concerned about your oral health, budget and time, a reputable discount dental plan may actually be what you are looking for.

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