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.