Types of dental insurance plans.
There are two basic forms of dental insurance. They are:
With this type of coverage, you receive 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.
With this form of insurance, some type of technique is implemented in an attempt to help to control 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).
Terms you’ll need to know.
As you read the remainder of this page, you’ll encounter the following terms. Use each one’s associated link if you need more information about it.
- Plan restrictions: Wait periods, Pre-existing conditions, Excluded dental services.
- Financial restrictions: Deductibles, Maximum benefits.
- Covered 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).
This type of coverage provides benefits for treatment the insured 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 needed and performed.)
The level of benefits provided depends on the procedure’s classification.
The company will divide a master list of dental procedures into categories.
- For some, such as preventive dental care, the benefit provided might be 100% of its cost.
- For other types of procedures (basic and major dental services), coverage might only run on the order of 50 to 80%.
- In those situations where the cost of the treatment is not fully covered, the patient pays the difference.
(Use the links above for more detailed information about each category, the procedures it includes and common coverage levels.)
Indemnity 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.
2) Managed Care dental insurance plans.
Managed-care policies take the following forms.
- Capitation Dental Plans (Dental Health Maintenance Organizations, “HMO”).
- Preferred Provider Organization (“PPO”) programs.
- Exclusive Provider Organization (“EPO”) programs.
A) Dental Health Maintenance Organizations.
Capitation plans (Dental HMO’s) involve an arrangement where:
- A dentist (dental office, several offices, a network of dentists) contracts to provide services for the plan’s members.
- The dentist is paid (usually monthly) a fixed amount per plan participant who has selected them as their treatment provider.
- It’s then the dentist’s obligation to provide any and all needed treatment for these individuals (as specified by the conditions of the plan) during the negotiated time frame.
It’s common that Preventive dental services are provided at no charge, while other procedures (Basic and Major services) require a co-payment.
You’ll have limited options when choosing a dentist.
HMO’s are a type of “closed panel” plan. At the extreme, you may only have a single dental office or clinic to choose from when seeking treatment.
(Note: If you’re considering joining an HMO you must evaluate what remedies are available to you for those times when you require dental care and are away from home and out of the area serviced by your provider.)
The ideal HMO philosophy.
Unlike a fee-for-service (indemnity) insurance plan where the dentist is paid for each and every procedure they perform, with a capitation plan the contracted dentist is paid a set amount regardless of how much or little service 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 oral 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 treatment is provided should bring some questions to mind. One of them is will they provide all of the services that you ideally should receive?
There’s also the possibility that the amount of services that the enrolled members require exceeds the dollar amount the contracted dentist has been paid. In this instance, the more 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 joining an HMO, it would be ideal if you could find other members and ask them what their experiences have been.
For example, when they needed work, did it seem that a full range of treatment options was 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) insurance plans.
Dental PPO’s are technically a “closed panel” type of arrangement.
- 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 service 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 benefits (higher deductibles, lower coverage rates, etc…).
Some PPO’s offer a larger provider network than may be initially realized.
A recent development in PPO’s is that of network-sharing agreements. This is the situation where a first dental network allows a second network of providers (from a different PPO organization) to function as in-network providers too.
Generally speaking, this is a plus for plan members in the sense that they have a larger group of participating dentists to choose from (possibly considerably so).
Network sharing can create substantial confusion for dental offices providing treatment as to which company’s reimbursement schedule applies. Frequently this issue resolves in a manner that favors the plan member (keeping their costs lower), at the expense of the treating dentist.
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 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.
How will your dentist be chosen?
Dental plans can vary widely in the amount of latitude they allow you when choosing who will provide your dental care.
If you already have a dentist, you may feel that it’s important for you to continue receiving your 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 closed panel feature should be just fine.
Some programs are set up where any dentist can participate as a provider of 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 as your provider.
Traditional (indemnity) insurance policies typically feature an open panel arrangement.
Other programs stipulate that the dentist providing your care must be one approved by the plan. This type of situation is termed a “closed panel” of dentists.
The group of providers 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 providers 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 an insurance company, setting up a closed-panel network is one way they can help to control and more accurately project their costs.
Some plans offer open and closed-panel features.
Of course, having a completely open or closed panel are the two extremes. Some programs are designed so they have at least some allowance for both options.
Open plans that have closed-plan features.
Some open-panel programs have a feature where, yes, any dentist can provide your care but you receive a higher 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.
Disadvantages of closed-panels.
If you do consider coverage 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, such as in an area where there are no provider dentists.
- Are dental specialists included as 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?
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