Dental Insurance and Discount Plans

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What Is Indemnity Dental Insurance?

Dental insurance plans are commonly divided into two types: “fee-for-service” and “managed care.” (See DHMOs .) Indemnity dental insurance plans (also known as “traditional” insurance plans) are the original type of fee-for-service dental insurance plan.

With an indemnity dental insurance plan, individuals have the freedom to visit any dentist. However, unlike managed care providers, the providers of indemnity dental insurance (also known as “carriers”) only make payments after receiving and reviewing the dentist’s bill.

Plan subscribers (members or patients) must pay for the dentist’s services in full and submit a claim to the carrier for reimbursement. Payments may be made to the insured member or by assignment directly to the dentist.

As a result, those who participate in indemnity dental plans make higher out-of-pocket payments. On the other hand, compared to managed care plans, indemnity dental insurance plans offer their patients the broadest choice of dentists from which to receive dental care.

Indemnity Dental Plans and the Patient: What to Consider

Providers of indemnity dental insurance plans usually pay only a percentage of the total charges for a given dental procedure. In addition, the providers place a ceiling or upper limit on the amount they will pay for each procedure. Therefore, it is generally recommended that patients considering participating in an indemnity dental plan complete a pre-claim before having major services done, so they will know in advance how much the insurance carrier will cover.

To determine the top figure allowed to be paid by the plan, a concept known as a usual, customary, and reasonable fee (UCR) is used. Here’s how UCR works: individual dentists determine what fee amount is “usual” and “reasonable,” and the plan provider determines what amount is “customary” within a given geographic market area.

The percentage the indemnity provider pays for given services will most likely correspond to the dental insurance company’s fee schedule, which may or may not be equivalent to the fees charged by a particular dentist. If there is a difference between the dentist's full charge and the amount paid by the insurance plan, the insured individual usually pays the difference.

Dental procedures can be very costly, and fee schedules are subject to frequent updates. It is also important to understand what percentage of the customary fee the indemnity dental plan provider is committed to pay.

Finally, indemnity dental insurance plans also require a deductible and have a waiting period before certain services are covered.

If these and related provisions of the indemnity dental plan appear satisfactory to the inquiring patient––and if the premium for the dental plan is affordable––an indemnity dental plan may be a sensible dental insurance option.

Summary of Indemnity Dental Insurance Challenges and Strengths

Indemnity Dental Insurance Challenges:

  • Subscribers must pay for services in full and submit a claim form to the carrier for reimbursement
  • Providers make payments only after receiving and reviewing a bill, which means that patients participating in indemnity dental plans make higher out-of-pocket payments
  • What is “usual” or “reasonable” is determined by the dentist in question, while the figure deemed “customary” is determined by the indemnity dental plan provider––and the two parties’ numbers do not always match
  • If there is a difference between the dentist's full charge and the amount paid by insurance, the individual usually pays the difference
  • Indemnity plans require a deductible and have a waiting period before certain services are covered

Indemnity Dental Insurance Strengths:

  • Offers patients a greater array of dentists from which to receive dental care than do managed care plans
  • Indemnity plans usually cover a significant portion of the patient’s bill
  • Patients may complete a pre-claim before having major services done so they will know in advance how much the insurance carrier will cover

If these and related provisions of the indemnity dental plan appear satisfactory to the inquiring patient––and if the premium for the dental plan is affordable––an indemnity dental plan may be a sensible dental insurance option.

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