What Is a Maximum Benefit in a Dental Insurance Plan?
A “maximum benefit” is one of the trickiest concepts in dental insurance and if you don’t understand it, it may lead to high out-of-pocket costs. This article will give you a quick explanation of a maximum benefit and demonstrate how this feature affects your insurance’s financial protections.
An Introduction to Spending Limits
A maximum benefit is a feature typically associated with dental PPO insurance and dental indemnity plans. The maximum benefit is a dollar value that represents the most an insurance plan will pay for your dental care in a year. If a plan has a maximum benefit of $1,500 than any dental costs above $1,500 is paid completely by the patient even if the dental service is covered by the insurance plan. The dental costs that count toward the maximum benefit reset each year, so if your policy begins on January 1st, you start with $0 spent by the insurance company toward your maximum limit.
A maximum benefit is sometimes called an annual maximum or a plan limit, but the concept remains the same.
Is a Dental Maximum Benefit Legal?
Yes, a maximum benefit is legal in the dental insurance industry. In other types of medical coverage, such as Medicare Advantage plans and Affordable Care Act plans, there is no limit on an insurance company’s annual spending for covered care (though there are conditions on that care related to network, prior authorization, etc.). Moreover, both Medicare Advantage plans and Affordable Care Act plans also have a MOOP, which is a yearly limit on out-of-pocket costs for covered treatments.
Why You Need to Monitor Your Maximum Benefit
If you are enrolled in a dental plan that has a maximum benefit, you need to monitor that amount from year. Why? Inflation. As the cost of dental treatment increases annually, a static maximum benefit means your plan covers less now than it did when you first enrolled in the coverage. Some dental plans increase the maximum benefit over a three-year period as a loyalty reward for continuous enrollment. Other plans do not adjust their maximum benefit. If you are enrolled in a plan with a low maximum benefit (e.g. $1,000 annually), it would be wise on an annual basis to explore the cost other plans with higher maximum benefits (or plans that lack these caps altogether).
Maximum Benefit Is Not Directly Related to Premium
There are a variety of dental insurance options on the market. Importantly, these options for foster competition regarding benefits, networks, and costs. With respect to a maximum benefit, generally the larger the maximum benefit, the higher the premium. However, there are a variety of exceptions. Consider the two dental plans below:
You’ll notice that the first plan has a slightly lower monthly premium than the second but, despite the lower premium, the first plan has a maximum benefit that is $250 higher annually.
The example below is even more striking. The first plan has a premium quote 14 percent less expensive than the premium of the second plan but its maximum benefit is $1,000 more generous each year.
The lesson from these examples is that it pays to comparison shop.
There are many dental plans with max benefit of $1,500, Some plans such as the NCD Nationwide 5000 Plan and Humana Extend 5000 have a annual spending limit of $5,000.
Don’t Forget the Details!
When evaluating the maximum benefits of dental plans, also dig into the Plan Details. Some plans have multiple maximum benefits. For example, a plan may have a $2,000 maximum benefit for preventive and basic dental care but a $1,500 maximum major care. Get into a thorough review of a plan’s benefits to see if there are any waiting periods on dental service coverage or a reduced maximum benefit for major services.