Understanding Dental Insurance Rates

According to the Insurance Information Institute, the average monthly dental insurance premium for an individual ranges from $15 to $50 per month, a difference of over 300 percent. Consequently, knowing how to properly and effectively evaluate dental insurance rates may translate into significant savings on monthly premiums.

When evaluating these rates, there are several factors that should be considered that affect the premiums a potential purchaser would pay. These include the insurance plan's structure, dentist network, dental service fees, group rating, funding ratio, and administration costs.

Structure

The number and amount of benefits the plan offers directly affect the rate that an insurance company will charge. Benefits such as co-insurance, co-payment, annual/lifetime maximum amounts, deductibles, limitations, and exclusions can increase or decrease dental insurance rates. As a rule, the more benefits the plan offers, the higher the rate.

Dentist Network

Knowing the type of dentist network- fee-for-service (traditional) or managed-care (HMO/PPO/EPO)-may help a purchaser potentially save money. Participants should know the fixed rate that the network dentists charge, how the dentists are reimbursed, and the rates charged by out-of-network providers as these all directly affect premium rates.

Dental Fee Trends

Dental insurance carriers carefully evaluate the annual dental fee trends to help determine their costs. Dental service trends that increase annually will directly impact the rates that these companies charge, and a purchaser should inquire about the effect these trends have on the company's rates.

Group Rating

For group dental insurance policies, such as an employer-sponsored program, the insurance company carefully evaluates an employer's location, previous employee claims history, and the total number of participating employees to help determine insurance rates.

Funding Ratio

For group plans, the ratio of employer-to-employee contribution directly affects the premium charged to group participants. An employee's share of contributions to the premium costs may have an impact on plan enrollment and employee use.

Administrative Costs

For group plans, administrative costs should be considered by a potential purchaser in assessing rates. Higher administrative fees, justified by the high quality of professional oversight, can translate into higher premiums for participants.
When determining if dental insurance rates are affordable, a potential purchaser should carefully consider the numerous factors that affect monthly premium rates before purchasing a policy.
An insurance policy is like any other legal agreement. It should be read completely and thoroughly understood so that the participants know their potential benefits and liabilities.
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