How Dental Insurance Works

While dental insurance may not be mandatory like general medical insurance, investing in a dental insurance plan should still be a serious consideration.

Dental insurance plans pay for a portion of your dental work in exchange for your monthly premium payment. Like health insurance plans, more expensive policies tend to offer higher coverage rates and network options, while less costly plans tend to be more restrictive and have lower coverage levels.

Most dental insurance policies offer coverage for the same types of preventative and restorative dental care, while coverage for major, non-emergency dental work may not always be covered. Some types of dental work are almost never covered or only covered with very high copayments. All dental insurance policies will require policyholders to pay some combination of out-of-pocket costs including the monthly premium, deductibles, copayments and coinsurance fees.

There are two basic categories of dental insurance plans that people choose from: indemnity dental insurance plans and managed care dental insurance polices. These plans differ from one another by their freedom to choose different dentists, how out-of-pocket costs are calculated for the patient, whether there is a cap on covered dental work or not and more. Most types of dental insurance plans require policyholders to wait six to 12 months before taking advantage of a dental insurance policy’s most costly benefits. Some people opt for discounted dental savings plans, which offer discounts on covered dental work to program participants in a similar way to dental insurance programs but are not quite as medically or legally comprehensive.

Dental Services Covered by Dental Insurance Policies

Most dental insurance providers categorize dental services as preventive, basic or major. Preventative dental work generally includes services like checkups, X-rays, regular cleanings and more. Many dental insurance programs cover all or most of preventative care dental costs.

Basic dental services generally include fillings, tooth extractions, root canals, treatments for gum disease and the like. This dental work is usually covered for at least 70 percent of costs by dental insurance plans, with policies requiring enrollees to pay a deductible, copayment or coinsurance fees when services are rendered.

Major dental work is procedures like crowns, bridges, dentures, inlays, etc. Major procedures like these are covered at varying rates by dental insurance providers, usually resulting in the patient paying a larger out-of-pocket portion of the cost than with other types of dental work. Braces can sometimes be covered through a rider to avoid hefty fees, but often only after a long waiting period. Because groupings can vary, individuals shopping for a new dental insurance plan should look through a policy well to see which dental procedures fall into which categories before coming to a purchase decision to avoid paying “major” fees for dental procedures that another policy might cover at basic rates.

Some dental procedures are rarely covered by dental insurance plans. These include cosmetic dental procedures like tooth shaping or whitening, veneers and gum contouring. These types of dental services are not considered medically necessary and therefore not eligible for coverage under most dental insurance plans. As a result, the patient generally pays 100 percent of these dental costs. If an insurance program enrollee is turned down coverage for a dental service that he or she believes should be at least partially covered by the insurance provider, most dental insurance plan administrators can organize a peer review for dispute resolution between patients, dentists and insurance providers. These peer reviews are intended to be fair hearings that can quickly resolve a dispute without involving costly legal services.

Costs and Coverage Maximums for Most Dental Insurance Plans

Like medical insurance programs, most dental insurance plans require policyholders to pay some combination of deductibles, copayments and coinsurance fees for covered dental services received. Dental insurance deductibles are the amount that you have to pay towards covered dental work until your insurance coverage kicks in. If you have a deductible of $100, for example, and you receive insured dental care that ends up costing a total of $124, you will pay $100 deductible and your insurance provider will pay the remaining balance of $24. Once a policyholder meets their deductible amount, all further dental services will be covered at the agreed upon rate by the insurance provider. In most cases, this covered amount will be somewhere between 20 to 80 percent of the total cost. The remaining percentage that must be paid by the policyholder is called the coinsurance fee. Some dental insurance providers may require program enrollees to make a copayment as well, which is a set fee for every dental service received that is in addition to the deductible or coinsurance fee.

Unlike medical insurance policies that generally cap out-of-pocket caps for policyholders, most dental insurance plans have caps on the amount that the insurance provider is required to cover on a yearly basis. This coverage maximum tends to range between $750 and $2,000 annually. You may be able to opt for a higher coverage rate for higher premium costs, if desired. When a covered patient meets her or his coverage maximum for the year, the insurance provider does not provide any more benefits until the next insurance year begins.

Some dental insurance providers allow funds that were not used (up to the coverage maximum) during a policy year to roll over into the next year, increasing the maximum coverage amount for the following year by that remaining amount. Other dental insurance providers use annual benefits limitations to restrict policyholder usage, providing coverage for only a set number of dental procedures or types of dental services. While annual benefits limitations may seem excessively restrictive, they allow dental insurance providers to keep annual premium costs to a minimum.

The Most Common Types of Dental Insurance Plans

Luckily, there are not quite as many types of dental insurance plans as there are medical insurance plans to understand and sort through. The two primary categories of dental insurance plans include dental indemnity insurance, paid through a direct reimbursement scheme or a schedule of allowances plan, and managed care dental insurance policies. Some people also opt for a dental discount program (DPP), not technically an insurance plan but a savings program nonetheless. The most common types of dental insurance plans available today include:

  • Dental indemnity insurance programs are the typical type of insurance plan that pays for a percentage of dental services rendered after the policyholder submits a claim for covered dental work. Within dental indemnity insurance programs, patients can choose to see practically any dentist they want, but have to pay all costs upfront and wait for a reimbursement from the insurance provider later. Some plans, however, allow for pre-claims to be submitted for planned dental work. Most dental indemnity insurance plans provide reimbursements in one of two ways:
    • Direct reimbursement dental insurance plans provide program participants with a percentage of all funds spent on eligible dental work, regardless of the specific dentist seen or services received. These types of indemnity plans tend to offer some of the most comprehensive coverage options available in dental insurance plans, but also some of the highest annual premium costs.
    • Schedule of allowances dental insurance plans have an established table of payments that dictates how much a policyholder will receive for any eligible dental procedure. These payments are set regardless of what an individual dentist may charge or how much the patient paid at the time of service. This type of dental indemnity insurance plan generally makes it easy for participants to estimate their out-of-pocket costs, since they do not have to wait for a decision to be made by the insurance provider concerning how much they will cover.
  • Managed care dental insurance policies are most often dental health maintenance organizations (DHMOs) or dental preferred provider organizations (DPPOs), insurance policies with established networks of participating dentists.
    • DHMOs provide policyholders with a network of dentists to choose from for free or reduced price dental services in exchange for an annual premium and some combination of out-of-pocket fees like deductibles, copayments and coinsurance fees. DHMOs do not usually provide much coverage for out-of-network dentists but do provide plan participants with serious savings on dental work.
    • DPPOs also offer program participants a network of dentists to choose from for primary care, though out-of-network dentists can generally be seen for a discount as well. Enrollees in DPPOs must pay either the dentist’s fees or the maximum allowable fee according to the insurance provider, whichever is lower. Dental exclusive provider organizations (DEPOs) are also available, and the DEPO plans provide restricted access to a dentists’ network but cost significantly less than the average DPPO.
  • Discount Dental Plans (DPPs) provide program participants with an established discount on most dental services that are provided by a set network of participating dentists. Some DPPs can save patients over 50 percent on preventative dental work or basic procedures. DPPs never have a waiting period and generally cost much less than dental insurance programs.

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