Buying insurance and gambling at a casino share some similar traits. They are both carefully constructed to make you believe you will win, both only remain in business if you lose and while they are both hugely popular, neither is a necessity of financial prudence. This is the truth about how a dental insurance policy actually works.
The dental insurance deductible works like any other insurance deductible. The insured must pay this amount before the insurance company will pay anything. Unlike car insurance however, where a higher deductible will lower the monthly premium, the deductible for dental insurance is not usually negotiable and typically runs from $50 to $200 per calendar year. Preventative services such as dental cleanings, x-rays, exams and children’s fluoride and sealants are not usually subject to the deductible and are paid in full by the insurance policy. The promise to pay 100% of cleanings is what usually convinces people to purchase dental insurance. In reality, paying cash for a dental cleaning typically costs $95 to $125 dollars where as a dental insurance policy typically costs over $350 per year. Except for large families, that math does not add up.
Following a dental exam, a dentist will devise a treatment plan including preventative, basic restorative and major restorative procedures that need to be completed. These categories are how an insurance company decides what percentage of the costs they will pay. 80% of restorative procedures, such as fillings, are typically paid by insurance leaving 20% to be paid by the patient.
However, the insurance company also throws in something called Usual and Customary. The insurance plan will typically only pay for placement of a silver filling and not the more expensive tooth colored fillings that most patient’s want. Since the tooth colored fillings cost nearly twice as much as silver, the patient is stuck with paying the difference in cost in addition to the 20% co-payment for restorative procedures.
Major restorative, including root canals, bridges and crowns tend to be the most expensive procedures and are usually paid at 50%, leaving the other 50% to be paid by the insured. These procedures are also frequently caught in the Usual and Customary trap where the insurance company will only pay for a silver crown while most people, conscience of their appearance, prefer a tooth colored crown to looking like a modern day pirate.
Annual and Lifetime Maximum
Submitting dental insurance claims also requires wresting with an annual maximum allowance that hovers around $1000 to $1500 per year. With crowns costing anywhere from $800 to $1000 dollars each, it would only take two crowns, paid at 50% co-insurance, minus the Usual and Customary difference to meet or exceed the annual maximum. Lifetime maximums are typically applied to children’s orthodontics regardless of whether treatment needs to be repeated, which it frequently does.
There are circumstances where dental insurance is a sound financial investment, such as when significant dental work is needed or for families with several children. The fine print of dental insurance policies should be read and understood with an eye toward deductibles, co-payments and annual maximums. Sitting down with a pen, paper and calculator is often the best way to determine if a family can win the dental insurance game.