By Kev Coleman Insurance Industry Expert& Author
In this article
With staggering inflation eating away at family budgets, more consumers than ever are asking ”Can I Afford Dental Insurance?” However, affordability touches on more than price. It is entwined with the range of dental services covered, the dentists who provide the care, and out-of-pocket costs charged. This article will review:
Why the Lowest Premium Plan Isn't Necessarily the Most Affordable Plan
Why the Lowest Premium Plan Isn't Necessarily The Most Affordable Plan
It's counter-intuitive but true: The lowest-premium dental plan is not necessarily the most affordable. Why? The answer lies in a consumer's total spending on dental care over the course of a year. "Total spending" includes not only every premium paid by the enrollee each month but also the copayments, deductible, and other fees the enrollee paid out-of-pocket in the same period.
The below table presents two hypothetical scenarios. The first, Plan A, is a low-premium dental plan with high out-of-pocket costs and the second, Plan B, has a more expensive monthly premium but lower out-of-pocket costs. Both plans assume the same services are used in a year.
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Dental Plan A
Dental Plan B
Total Annual Premiums
Out of Pocket Costs
Dental Plan A
Dental Plan B
Annual exam & teeth cleaning
Total Annual Out-of-Pocket Costs
Dental Plan A
Dental Plan B
Total Annual Spending on Dental Care
In the above scenario, Dental Plan A has a lower monthly premium but it charges higher out-of-pocket costs (50 percent of cost versus Dental Plan B's 20 percent of cost) for the same services. The result is that the enrollee in Dental Plan A would spend over 38 percent more than an enrollee in Dental Plan B in a year with regular annual preventive care along with one minor service (white filling) and one major service (crown).
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Factors Affecting Dental Plan Costs
While there isn't a simple way to predict the dental premiums available in your area, there are criteria by which you can evaluate the value of those premium quotes. Specifically, the following factors should be reflected within the cost of a dental plan's monthly premium:
Maximum annual payments
Number of enrollees
Broader and more extensive dental benefits with lower out-of-pocket costs typically is associated with higher premiums. There are exceptions, though. Dental HMOs may have broad coverage and low premiums but they are very restrictive on what dentists may be used and care from out-of-network dentists is uncovered. Dental discount programs may cover most services but their coverage model is a discount applied against retail prices.
A waiting period is a delay before a particular dental benefit is eligible for coverage by the insurance plan. For example, a plan may require an a person to be enrolled in the plan for six months continuously before the plan will help pay for a crown or a root canal. Waiting periods are usually applied to more expensive dental services (as opposed to preventive care).
Maximum Annual Payments
The annual cap on spending by a dental plan for your covered dental benefits is often referred to as the "Plan Maximum.” Plans with higher plan maximums are more likely to have higher premiums than plans with the same benefits but lower plan maximums.
Number of Enrollees
The general rule of thumb is that the more enrollees on a private dental plan, the more expensive the monthly premium is for that plan. However, the increase in premium for each new enrollee is not consistent across plans. In some cases, the premium quote for a couple with two children is the same as a couple with one child.
In group dental insurance (sold to companies, unions, etc.), the total amount of premiums also increases as the number of insured on the policy increases. However, larger groups generally spend less per individual covered than small groups.
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People who live in high cost-of-living areas where dentists charge higher rates are more likely to receive more expensive premium quotes than is the case for the same plan offered in a low-cost-of-living area where dental services are less expensive.
Plan Type & Network
Some plan features are associated with lower cost premiums. For example, discount programs limit enrollees to a very narrow network of participating dentists who offer services at reduced rates and these programs are known to be very inexpensive. Dental Health Maintenance Organizations, known as dental HMOs, also limit enrollees to in-network dentists and are generally less expensive than dental PPO plans or indemnity plans. In most cases, PPO and indemnity dental plans have the advantage, though, of allowing enrollees to use out-of-network dentists.
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The Costs of Being Uninsured
Some consumers, given limited financial resources, have decided to go without dental insurance thinking this is the least expensive option. However, lacking dental insurance comes with its own expenses.
First, a person lacking dental coverage may be less likely to visit the dentist. This can negatively affect oral health and lead to dental conditions requiring expensive treatment in the future.
Second, if a person lacks dental coverage and visits a dentist for treatment, he or she may face higher prices for the same dental services used by people enrolled in an insurance plan. These lower prices are due to dental plans, such as PPOs and HMOs, negotiating with dentists in the interests of obtaining lower rates for dental services.
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