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Dental Indemnity Plans

By Insurance Industry Expert & Author
Updated on

Traditional Benefits with Uncommon Flexibility

A dental indemnity plan, sometimes referred to as “traditional” insurance, is a fee-for-service plan that reimburses an enrollee for a portion of covered dental expenses. The reimbursement amount is not based on what the dentist charges but, rather, the dental plan’s internal definition of “usual, customary and reasonable” fees. Inasmuch as this is a company-specific definition, the reimbursement amounts may or may not reflect the cost of dental services within the region in which the patient lives. Depending on the indemnity plan, the patient or the patient’s dentist may be required to submit a form to claim reimbursement.

In contrast to PPO and HMO dental plans, an indemnity plan typically operates without network restrictions for its members, thus allowing them to choose the dentist of their preference. This is one of the most compelling value propositions of indemnity dental plans. However, indemnity plans do have other features in common with PPO and HMO plans inasmuch as they have:

  • Monthly Premiums
  • A deductible
  • A benefit design documenting what dental services are covered and what services are uncovered

Once a more common form of dental coverage, indemnity coverage now accounts for only six percent of dental plans according to the ASDA (American Student Dental Association). Twenty years ago, indemnity plans accounted for 38 percent of dental benefits according to the American Dental Association.

Indemnity Plans Overview: What is indemnity dental coverage?

Indemnity plans generally are similar to other dental plans with respect to the services they cover. While dental benefits are not standardized, it is typically to see some level of coverage for the following services:

  • Annual exam, teeth cleaning
  • X-rays
  • Fillings
  • Tooth extraction
  • Crown
  • Root canal

As with other dental plans, indemnity plans may have some waiting periods associated with more expensive dental services. Waiting periods are specific to the insurance company and the plan

Why Dentist Choice Matters

As mentioned earlier, the freedom of dentist choice is one of the most desirable features of indemnity dental plans. Why is this the case?

Dentists, like every other profession, evidence differences in talent and quality from one to the other. This matters to consumers because low quality dental work can:

  • Result in the need of later repair or remedy
  • Allow significant dental issues to remain undetected
  • Adversely affect oral health

A dentist’s personality is also important. Many people have anxiety about visiting a dentist due to fears about painful procedures or shame about the status of their oral health. If a person connects with his or her dentist on a personal level, he or she may be less anxious about dental visits and more likely to keep up within annual exams and other periodic care promoting sound oral health.

Indemnity Plan Trade-Offs

Every form of dental coverage has its advantages and disadvantages. Below is a brief discussion of these pros and cons as they apply to indemnity plans.

Pros

  • Extreme flexibility on dentist choice
  • No network limitations (for most indemnity plans)
  • No requirement to get referrals for more advanced dental services

Cons

  • The definition of “usual, customary and reasonable” fees is internally controlled by the insurance company
  • Depending on the dentist chosen, there may or may not be a significant gap between the plan’s reimbursement level for a service and the actual cost of that service from your preferred dentist
  • You may have to file your dental bill with the insurance company in order to obtain reimbursement

The list of cons deserves a few comments. With respect to the potential for a significant gap between actual cost of a dental service and the plan’s reimbursement level, an enrollee can obtain information ahead of time regarding an indemnity plan’s reimbursement amount. He or she may use this information to: a) negotiate with a dentist, or b) use a less expensive dentist.

The potential for the enrollee to file a dental bill with the plan in order to obtain reimbursement does mean indemnity plans can have more paperwork than some other dental coverage options. However, claim forms are typically simple and, in some cases, the enrollee’s dentist may file it on behalf of the patient.

Beyond Indemnity Plans

In this article, you’ve learned many of the important considerations associated with indemnity dental insurance. However, there are more dental coverage options to weigh, such as PPO plans, HMO plans, and Discount Programs. If you need information on these matters, check out our Resources section.

Additional information about indemnity dental plans is available from the National Association of Dental Plans (NADP), a Texas-based non-profit organization that is the recognized representative for the U.S. dental benefits industry.