Types of dental insurance policies.
There are two basic forms of dental insurance. They are:
"Traditional" insurance simply involves the situation when you have treatment performed by your dentist. A claim is then submitted and the insurer provides benefits for that procedure based on the terms and conditions of your policy.
Managed-care dental insurance involves the situation where some type of technique has been implemented that is thought to help to control or reduce the cost of providing services to the plan's members. Managed-care programs include Health-maintenance Organizations (HMO's) and Preferred-provider organizations (PPO's).
Use the links above or scroll on down to lean more about each of these two approaches to providing dental coverage.
Dental insurance - Terms.
As you learn about the various forms of dental insurance, you'll run across the following terms. We've listed them all together here for use as a reference source.
- Plan restrictions: Wait periods, Pre-existing conditions, Excluded dental services.
- Financial restrictions: Deductibles, Maximum benefits.
- Covered dental procedures: Preventive, Basic and Major dental services.
- Calculating benefits: UCR fee schedules, Table of allowances.
- Service providers: Open panels / Closed panels.
1) Traditional dental plans (Indemnity policies).
"Traditional" (indemnity) insurance provides benefits for the dental treatment that the covered individual has received from their own dentist on a fee-for-service basis. (That simply means that each procedure becomes a subject of coverage as it's need and performed.)
The level of coverage depends on the procedure's classification.
For some dental procedures (such as preventive dental care) the benefit provided by an insurance policy might be 100%. For other types of procedures (basic and major dental services), the plan's benefit might only run on the order of 50 to 80% of the cost of the procedure. (Use these links for more detailed information.)
In those situations where the cost of the dental treatment has not been fully covered, the patient pays the difference.
Indemnity dental insurance plans usually employ an "open panel" of dentists. (This format allows you to seek services from the dentist of your choice.)
How benefits are calculated.
- "Usual, Customary, and Reasonable" ("UCR") dental insurance plans.
- "Table of allowances" dental insurance plans.
2) Managed Care dental insurance plans.
A) Capitation dental plans (Dental Health Maintenance Organizations).
Capitation plans (Dental HMO's) involve an arrangement where a dentist (dental office, several dental offices, a network of dentists) has contracted to provide dental services for the plan's members.
The dentist is paid (usually monthly) a fixed amount per dental plan participant who has selected them as their treatment provider. In return, it is the dentist's obligation to provide any and all needed dental treatment for these individuals (as specified by the conditions of the plan) during the negotiated time frame.
Typical HMO dental benefits.
It's common that Preventive dental services are provided at no charge, while other dental procedures (Basic and Major services) require a co-payment.
With an HMO, you have limited options when choosing your dentist.
HMO's are a type of a "closed panel" dental plan. At the extreme, you may only have a single dental office or clinic to choose from when seeking dental treatment.
(Note: If you consider joining a HMO you must evaluate what remedies are available to you for those times when you require dental treatment and are away from home and out of the area serviced by your plan.
The ideal HMO philosophy.
Unlike a fee-for-service (indemnity) dental insurance plan where the dentist is paid for each and every dental procedure they perform, with a capitation plan the contracted dentist is paid a set amount regardless of how much or how little treatment they provide.
This means, at least when the very long term is considered, that it's in the dentist's best financial interest to help their patients achieve and remain in good dental health. This way the dentist will only need to provide a minimal amount of Basic and Major services in future years. As a result, their financial bottom line will be enhanced.
Potential conflicts of interest.
The fact that the contracted dentist is paid a set amount per plan member regardless of how much dental treatment is provided should bring some questions to your mind. One of them is will they provide all of the treatment that you ideally should receive?
There's the possibility that the amount of dental treatment that the enrolled members require exceeds the amount the contracted dentist will be paid. In this instance, the more dental treatment the dentist performs the more money they will lose.
Research the reputation of the HMO you plan to enroll with.
If you're considering an HMO plan, it would be ideal if you could find other members and ask them what their experiences have been. When they needed work, did it seem that a full range of treatment options were offered, or was just the quickest and cheapest fix provided? Are dental appointments readily available, or are they backlogged and hard to get?
B) Preferred Provider Organization (PPO) dental insurance plans.
Preferred Provider Organizations (dental PPO's) are technically a "closed panel" type of plan. The insurance company contracts with dentists to create a network of treatment providers. In return for being included in the network, and hopefully receiving an increased patient load, the dentist agrees to discount their fees.
Some PPO's offer an "open" panel option.
Some plans will allow you to receive dental treatment from a dentist who is not a member of their network (a "non-participating" dentist). The trade off is if you do, you will be penalized with a lower level of plan benefits (higher deductibles, lower benefits, etc...).
How are benefits calculated?
The method used to determine the benefits provided by a PPO plan will vary. It may employ a "Table of Allowances" or use a "UCR" fee schedule (both methods are described above in our indemnity dental plans section). Or copayments may be involved, more akin to an HMO.
C) Exclusive Provider Organization ("EPO") dental insurance plans.
Exclusive Provider Organizations (EPO's) are another form of "closed panel" dental insurance. They are similar in nature to dental PPO's with the exception that you are offered no option other than receiving your treatment from a dentist who is a member of the plan's network of providers.
Open and closed panel dental plans: How will the dentist who provides your treatment be chosen?
Dental plans can differ widely in the amount of latitude they allow you when choosing the dentist who will provide your dental care. And as a part of your evaluation of a plan, you must decide if the method allowed meets your needs.
If you already have a dentist, you may feel that it's important for you to continue receiving care from them. If so, you'll want an open panel plan.
For people who do not currently have a dentist, or are receptive to the idea of changing, either an open or close panel feature should be just fine.
"Open panel" dental plans.
Some programs are set up where any dentist can participate as a provider of dental services for the plan's members. If so, it's said to have an "open panel" feature.
This type of option is nice in the sense that your current dentist, or else the dentist you had hoped to go to, can definitely be used to provide your dental treatment.
Traditional (indemnity) dental insurance plans typically feature an open panel arrangement.
"Closed panel" dental plans.
Other programs specify that the dentist providing your dental treatment must be one approved by the plan. This type of situation is termed a "closed panel" of dentists.
The group of dentists you can choose from might be as large as a nation-wide network. Or, at the other extreme, as limited as a single dental office.
Why closed-panel plans exist.
The concept of a closed panel has to do with the fact that the company administering the plan has contracted with provider dentists to form a "network." In return for receiving patient referrals (the members enrolled in the plan), the participating dentists have agreed to discount their fees.
For a dental insurance company, setting up a closed-panel network is one way they can help to control and more accurately project their costs.
Some dental plans offer open and closed-panel features.
Of course having a completely open or closed panel are the two extremes. Some plans are designed so they have at least some allowance for both options.
Open plans that have closed-plan features.
Some open-panel plans have a feature where, yes, any dentist can provide your dental care but you receive a greater level of benefits if you choose a dentist who is a member of their network.
Closed plans that have open-plan characteristics.
Some closed-panel plans are so large or dominate in their geographic area that the fact that you must choose an enrolled dentist is a moot point because most local dentists are members.
Problems with closed-panel dental plans.
If you do consider a plan that has a closed-panel feature, and even if the dentist you would like to go to is a member of its network of providers, read through your policy's details thoroughly. Make sure you know what allowances are provided for situations such as:
- Dental emergencies that occur when you are out of town, possibly in an area where there are no provider dentists.
- Are dental specialists included as service providers for those times when the types of services they offer are needed?
- Are there any restrictions on the amount of access you have to participating dentists and dental treatment? Are appointments easily scheduled or is there a lengthy waiting period?