Overview

Considered an attractive benefit by most employees, dental insurance operates in much the same way as health insurance. In fact, it can often be purchased in addition to basic medical care, or it can be purchased as a separate policy from a separate provider.

Dental coverage, or a dental benefits plan, reimburses the policyholder for certain dental expenses according to written agreement. Because most dental diseases are preventable (unlike many medical diseases, which can be unpredictable and catastrophic), most dental benefits plans are structured to encourage patients to obtain the regular, routine care that is vital to prevention and diagnosis.

This emphasis on prevention is reinforced by most plans, which require the patient pay a greater portion of the costs for treatment of dental disease than for preventive procedures. Dental premiums usually vary from about $10 a month for a single person to $71 for a family. 

Making Choices

Some plans allow you to choose your own dentist. Others, in exchange for lower rates, limit your choice. Although the opportunity to choose a dentist is only one factor in the decision to choose a plan, it is a good idea to note the difference between the two alternatives:

Coverage

To control dental treatment costs, most plans will limit the amount of care a patient can receive in a given year through a variety of methods. They may place a dollar " cap" or limit the amount of benefits, or may restrict the number or type of services that are covered. The exclusion of certain services or treatments is also a method of reducing costs. Be sure to investigate exactly what services the plan covers and excludes, including special administrative services available to both purchasers and participants.  

Major Plan Types

Indemnity Plans

Indemnity plans are traditional fee-for-service based plans. Normally, the employee pays a monthly premium to the insurance company, which covers a portion of his or her dental expenses. A high pre-determined deductible is usually required before the insurer will begin paying for care, though you usually have the freedom to choose your own dentist. Preventative service costs are normally covered by the plan, which typically pays 100% of the preventative costs, 80% for common restorative services and 50% for major treatments, such as crowns and orthodontics. The remaining costs are paid by the patient through a variety of fee schedules. Most indemnity plans limit the annual dollar amount on benefits, however, and may apply probationary periods on procedures that could last up to a year. The average monthly cost of an indemnity plan is between $19 and $25. 

Dental HMOs

Also known as capitation plans, dental HMOs (DHMOs), are normally characterized by monthly premiums, free preventative or routine care, small co-payments for office visits, and selection from an approved network of dentists. The dentist is paid on a per capita (per head) basis rather than for the treatment provided. Contracting dentists -- those within the approved network -- receive a fixed monthly fee per patient regardless of whether treatment is performed. Patients may be referred to a specialist who also contracts with the plan, but they must pay in full if they use a dentist outside of the network. Other characteristics of these plans are possible initial enrollment fees and  annual dollar caps. These plans cost on average from $6 to $15 monthly.

Preferred Provider Organizations (PPOs)

Preferred Provider Organizations (PPOs) are somewhere between an indemnity plan and a dental HMO. Within this plan, a defined panel of dentists provide services at a discounted rate as long as you stay in their network. If you go outside the approved network of dentists, you will pay higher deductibles and co-payments. Typically, PPOs have monthly premiums and may have an annual dollar cap. The average monthly cost is $20. 

Discount Dental Plans/Referral Plans

Discount dental plans, or referral plans, are the most widely available to individuals. Participants of these plans must use a participating dentist, who has agreed to offer services at a discounted rate. Typically, you pay an initial enrollment fee as well as a monthly fee to the discount company through which your discount is secured. The average monthly cost is $7 to $20. With discount dental plans, there are no deductibles, no waiting periods and all on-going conditions are accepted. There is no yearly maximum and no limits on the number of visits to your dentist, orthodontist or other oral specialist. You can generally begin using your benefits immediately once you receive your membership number. You often get a better value out of these plans because they often come bundled with other discounted health benefits (eg. vision, chiropractic and prescription).

Direct Reimbursement Plans

A direct reimbursement plan is a self-funded benefit plan and is not considered an insurance plan. In most instances, an employer or company sponsor pays for dental care with its own funds, rather than paying premiums to an insurance company or third-party administrator. The patient pays the full amount to the dentist, gets a receipt for the employer, who reimburses them for part or all of the dental costs, depending upon the patients specific benefits. Typically, there are no monthly premiums. Cost depends on the number of employees, and participants have the freedom to choose any dentist they wish. Benefits are usually capped at $500 to $1,500 annually and the company may place a limit on how much an employee can spend on dental care within a given year. Often, though, there is no limit on services provided. Under this plan, the patient is reimbursed a percent of the dollar amount spent on dental care, regardless of the treatment category.