How Dental Insurance Works

Now, let me explain how dental insurance works in a language you can understand. No legal-ese here.
 
You either buy your own dental insurance or your employer provides it, usually at a reduced cost to you. You or your employer buy a certain level of coverage, be it 80/20 (80% of ‘reasonable and customary” charges paid by your dental insurance, the other 20% paid by you) or 90/10, or 50/50, etc. They all work the same with different payout levels.

Now, let me explain how “reasonable and customary” charges are compiled. The dental insurance companies may survey 10 or more dentists in your area for what their current charges are, by procedure. Out of these surveys, an average will be reached. That average is considered the ‘reasonable and customary’ charge for your area. (Note: I don’t think there is a set time for how often ‘reasonable and customary’ charges are updated, so buyer beware! You know prices can go up at without notice).

Now, when you or your employer goes to buy dental insurance, the insurance company will have several plans to choose from. The best, most costly plans will pay for 100% of ‘reasonable and customary’ charges, next is 90/10 and 80/20 plans (80% paid by insurance, 20% paid by you, etc.) So far, so good.

Other, lower cost plans may pay only 80% of the  ‘reasonable and customary’ charges (again, it may be 80% paid by insurance, 20% paid by you, but the amounts paid by insurance will be lower because it’s only paying 80% of the ‘reasonable and customary’ amount).

Your insurance company will have plans for 70/30, 60/40, and so on, with the lower the coverage, the lower the cost.

You or your employer decides your level of coverage. 

This can be confusing, so let me show you an example. Let’s say, reasonable and customary (R/C) amount for a procedure is $100.

Insurance A pays 100% R/C, and is split 80/20.
Insurance A pays $80, you pay $20

Insurance B pays 80% R/C , and is split 80/20  (80% of $100=$80)
Insurance B pays $64 (80% of $80) and you pay $36 ($100 - $64)

Some dental insurance plans offer payments by ‘fee schedule’, setting a flat fee per procedure and paying a certain % of the fee regardless of what the actual R/C is. They may still call it their ‘reasonable and customary’ charges, however.

=> My dental insurance has a deductible. How does that work?

Ok, let’s say your insurance has a $100 deductible.  Deductibles apply once every year, be it calendar year or business year. Some businesses have a business year that begins in, say, June, and ends May 31st of the following year. For this example we will assume your insurance goes by calendar year, January to December.

Assume you go to the doctor in January for a covered procedure, and the charge is $100, and your insurance pays 100% R/C on a 80/20 split. If your deductible was met, the insurance would have paid $80.

However, since your deductible has not been met, $80 of your doctor’s visit will go toward your deductible and not be paid to anyone.  Most patients do not realize that the amounts that go toward the deductible are only what insurance would have paid, not the whole charge.

=> What is a ‘provider’ for dental insurance and is my dentist one?

Insurance companies try to sign up doctors as ‘providers’ for them, as a way to entice patients to their practice. Upon agreeing to be a provider, the doctor agrees to accept only the insurance payment and writes off what the patient would normally have to pay.

Of course, the more the insurance company will pay, the bigger incentive for the doctor to sign up. Or they may consider the largest industry in the area, and sign up with their insurance carrier to get a steady stream of patients. You can bet, if your doctor is signed up as a provider for a large number of insurance companies, an appointment will be harder to get. Most, however, will sign up for your state or city’s plans and only the most popular. Keep in mind it is an incentive to get patients. Some practices may already have more patients than appointments and have no need to be a provider for insurance.

=> Does your dentist charge more than average?

You can conduct your own survey and find out. Call around and ask what a typical office visit will cost (or choose any procedure you want) from several different dentists, then get your average. Be sure to compare apples to apples, though. If your dentist is a specialist, compare with only other specialists in the same field.

=> Don’t have dental insurance?

There are plans you can buy that provide coverage for most dental procedures. These plans are usually reimbursement plans where you pay for the service and submit receipts to them yourself. Some are expensive, some are reasonable.

You really need to shop around.