What is Dental Insurance?

Dental insurance is an agreement between an insurance company and an insured party that is designed to cover a portion of the costs associated with professional oral hygiene and dental care, often including the practice of keeping the mouth and teeth clean to prevent cavities, gum diseases, and other dental disorders. Generally, a dental plan pays a percentage of the charges incurred at a dentist's office, which may include preventative services, such as cleanings. Each insurance company determines its plan's annual maximum limitation, deductible, and co-pay.

An important factor to consider when purchasing insurance for dental coverage is the evaluation of the total amount of benefits-or dollar amount-the plan offers. In conjunction, the number of visits, or frequency of visits, should be considered.

For participants who frequently visit the dentist, dental insurance may or may not be a fiscally wise purchase. It depends on the amount of the annual, or maximum, benefit. Policies with a high annual or lifetime benefits amount, such as $2,000 or $15,000, respectively, may be an excellent purchase for an individual with only one or two participants who have excellent dental health and typically only visit the dentist for an annual checkup and cleaning. However, those same benefit amounts may not make sense for an individual who has children in need of braces or crowns and who need to visit the dentist or dental specialist more often.

Deciding whether to purchase insurance plans entails assessing several factors, including the total amount of benefits allowed under the plan and the frequency of dental visits.

What Types Of Plans Are Available?

Dental plans can be grouped into two categories: fee-for-service and managed-care.

Fee-for-Service

Fee-for-service plans are those in which the dentist is paid for each service rendered according to the fees set by that dentist. Available through many employers, most fee-for-service plans are direct reimbursement plans whereby the benefits are based on the dollars spent rather than on the treatment delivered. The insured is allowed to go to the dentist of his or her choice, and depending on the plan, either the insured and the insurance company pay the dentist their portions directly or the insured pays the entire dentist fee and submits a paid receipt for proof of treatment and payment; the plan's administrator then reimburses the insured a percentage of the cost incurred.

Dental Insurance Fee-for-service plans may come in the form of an indemnity plan. This type of plan, also called "traditional" insurance, pays claims based on the procedures performed, usually as a percentage of the charges. These plans have a deductible, the dollar amount a participant must pay out of pocket before the insurance company provides any benefits for dental services. As with the other type of fee-for-service plan, an indemnity plan allows the insured to choose his or her own dentist.

Managed-Care

Managed-care plans integrate the financing and delivery of dental care to covered individuals into arrangements with selected providers that furnish dental services to members.

Managed-care plans that incorporate indemnity plans are referred to as preferred provider organizations (PPOs). This type of plan is a regular indemnity insurance with a network of dentists under contract with the insurance company to provide specific dental services at a set fee rate. Parties insured through a PPO may incur higher out-of-pocket expenses if they visit a non-contracted dentist.

Another type of managed care plan is the dental health maintenance organization (DHMO), which allows a plan participant to receive certain services from contracted dentists at no or reduced costs. Because these plans do not reimburse the dentist or insured for individual services, the insured party must receive treatment through a contracted dentist to receive a benefit.

No matter which type of plan is chosen, purchasers should carefully evaluate its benefits and costs to determine which plan best suits their specific needs and budget.

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