This article provides a brief discussion of what a dental payment plan is, why it is used, and weighs advantages and disadvantages of a payment plan compared to traditional dental insurance.
A dental payment plan is a form of financing similar to a loan. It involves a contractual agreement between a patient and a lender. The lender may be a third-party company partnered with the dental practice or it may be the dental practice itself. If the dental practice is the entity offering the payment plan, repayment may be required over a shorter period and/or there may need to be a lump sum paid at the beginning of the repayment period.
Repayment of the money owed may be made on a monthly or weekly basis depending on the individual payment plan agreement. Likewise, the interest rate charged on the money owed varies by lender. Patients are encouraged to compare the interest rate on a payment plan versus the rate they pay on their existing credit cards. It may, in some cases, be less expensive to use a credit card. Similarly, a personal loan from a bank may reduce the expense of financing.
If a 0% interest is offered, confirm the time period where the 0% applies. If the amount owed is not repaid during this time period, a high interest rate may be applied to the owed some and charged from the time the dental service was performed.
With the exception of 0% interest offers, dental payment plans are used because the patient does not currently have enough money to pay for a major dental service. A payment plan allows the service to be received at the time it is needed while allowing the patient an extended period to pay what is owed.
Before signing a dental payment plan agreement, make certain you have reviewed and approved:
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The following table compares some of the important differences in features between a payment plan and traditional insurance coverage.
| Dental Payment Plan | Dental Insurance | |
|---|---|---|
| Service coverage | Normally a specific dental event (e.g. design and creation of a bridge and placement of dental posts) | A variety of services defined by the plan’s Summary of Benefits and lasting for the term of the coverage (normally a year, or longer if the policy is renewed) |
| Out-of-pocket expenses | Normally a monthly payment lasting for an agreed upon term (e.g. 36 months) that will pay for both the dental service bill and the accrued interest on that bill | Monthly premium during the coverage period plus the copayments and/or coinsurance fees for covered dental care |
| Payment penalties | A payment plan may charge a penalty for late payments. It may also charge a penalty if the amount owed is paid earlier than the agreed term of repayment | Dental insurance may cancel coverage if its monthly premium is not paid on time |
| Application fee | Payment plans may charge a fee to apply for financing | Dental insurance usually does not charge a consumer a fee to apply for coverage but there are exceptions |
| Junk fees | Payment plans may charge additional fees associated with the financing process. These fees have a variety of names including “administrative fees.” The same fees are sometimes referred to as “junk fees” by consumer advocates | Dental insurance is not associated with junk fees since it is not a financing program |
| Maximum amount | Negotiated with the dentist | HMO dental plans do not have annual limits on how much insurance pays for covered dental services. PPO and indemnity dental plans |
| Credit check | A payment plan often requires a credit check to confirm a patient’s likelihood of repayment | Dental insurance application does not require a credit check |
Our knowledgeable customer service team will assist you with any questions you may have prior to enrolling in a dental plan. They can guide you through the process of choosing coverage that matches your needs as well as your budget.
