With the pressures COVID-19 has placed on the economy in recent times, more consumers than ever are asking, “Can I Afford Dental Insurance?” Affordability can be ambiguous at times so this article will address:
It is counter-intuitive but true: The lowest-premium dental plan is not necessarily the most affordable. Why? The answer lies in the total cost of dental care over the course of a year. “Total cost” includes not only every premium paid by the enrollee each month but all the out-of-pocket costs that enrollee paid for dental care annually.
The below table presents two hypothetical scenarios. The first, Plan A, has a low-premium plan and the second, Plan B, has a more expensive monthly premium. Both plans assume the same services are used in a year.
|Premiums||Dental Plan A||Dental Plan B|
|Total Annual Premiums||$240||$480|
|Out of Pocket Costs||Dental Plan A||Dental Plan B|
|Annual exam & teeth cleaning||$0||$0|
|Total Annual Out-of-Pocket Costs||$948||$379.20|
|Totals||Dental Plan A||Dental Plan B|
|Total Annual Spending on Dental Care||$1188||$859.20|
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).
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:
Benefits - Broader and more extensive dental benefits with lower out-of-pocket costs typically is associated with higher premiums.
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 dental plan, the more expensive the monthly premium is for that plan. However, as our article on Family Dental Insurance demonstrated, 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.
Region - 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 DHMOs, also limit enrollees to in-network dentists and are generally less expensive than dental PPO plans or indemnity plans.
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.
If you would like to continue reading on this subject, check out our article “Cheap Dental Insurance vs. Affordable Dental Insurance.”