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Until recently the only options available to the American consumer that did not have a dental plan available through their workplace was either a dental reimbursement plan, which helped pay some of the costs of dental visits, or a dental HMO plan which, while having reasonable copays, offered only a restrictive choice of dentists.   Neither choice being particularly attractive, most chose to simply pay for dental care for themselves and their families directly to their dentist.  Rising health care costs over the past few years has forced many employers to cut back on dental plan offerings, however, and as their employees who were used to dental insurance entered the individual marketplace they created a demand for group-like dental plans to be available for purchase.  Responding to the opportunity, many large insurance companies have made these products available and there is now a good selection of both traditional and PPO styles of dental insurance available for individuals, families and seniors.  In most cases, however, people are spending a lot more than they need to.

In order to be a good dental consumer it helps to first understand how the insurance process works.  In the traditional model you go to your dentist and insurance pays a percentage, typically 100% of UCR* for preventive visits, 80% for basic services like fillings and 50% for major work like crowns and bridgework.  In this system the insurance company is paying retail prices to the dentists and in order to make a profit they need to collect more via monthly premiums that what they pay out in benefits.  Essentially a flow through system, as dentist charges increase the insurance companies simply raise their premiums to keep up.

Following the example of the health insurance industry, the concept of managed care has also been applied to dentists as a means to control costs and the most popular dental plans are now PPOs, or Preferred Provider Organizations.  With this model, if you use a network dentist you’ll pay lower premiums for the same level of coverage as with traditional insurance.

In addition to premiums, insurance companies have several other means to maintain the profitability of their dental plans.  Most of them require deductibles be met, have waiting periods before basic and major services are covered, and place annual limits on the amount of services the insured can receive.  In spite of all this, it still makes sense to have a dental plan.  With the average cost of a six month routine dental visit close to $150 ($50+ for exam and $90 and up for a cleaning), over $200 if you have x-rays done, the out of pocket costs for a family of four without a plan could easily exceed $1,400 per year just for preventive care.  A traditional dental insurance plan that charges $120/month and pays for these visits in full can clearly be justified as a good budgeting tool and a PPO plan coming in at around $100/month offers value by costing less than paying out of pocket with no insurance.  Still, $100/month is a lot of money.  Especially when you realize that if you use the same tools that an insurance company does, the same dental care for a family of 4 can be had for half that amount.  The secret lies in understanding how a PPO plan works. 

PPOs contract with dentists to become ‘preferred providers’ which means they will receive less than their normal charges for services they provide to members of the network.  A strong network and a large customer base gives a PPO a lot of leverage and, in order to participate, a dentist has to accept discounts in the range of 50% to 80% off their usual fees.  With this tremendous buying power it is easy to see how an insurance company selling a PPO dental plan can offer value, provide customers with preventive care at no cost in exchange for annual premiums totaling less than what they would pay for those services in the retail environment, and still make a profit.  Imagine how low your costs would be if you could access these networks without going through an insurance company?  Well, imagine no longer.   Under the labels of discount plans you can now rent access to these networks for as little as $7/month for a single person and typically less than $16/month for an entire family.   Find a plan that gives you a 60% to 70% discount (shop around) off preventive care and you will only pay $400 instead of $1,400 by using a network dentist.  Add $200 for annual access fees and your total annual preventive dental costs for a family of 4 is just $600, half the cost of a PPO plan and a savings of $800 over either traditional insurance or paying retail.

A couple of words of caution when shopping for a discount plan:  companies that advertise the same network name may not offer the same rates or discounts, and be very skeptical of those savings plans that just offer 20% to 40% discounts without giving much detail.  Never buy a plan that doesn’t provide you with the specific dollar amounts that you will be paying for particular procedures.  I’ve created a checklist, how to evaluate a dental plan, on my website that you might find useful as you shop around.  For an example of what a discount plan should offer, check out the Careington Dental Plan :  at $6.95/month for single and $15.95/month for a family, it is my top pick.

Americans are the best consumers in the world.  It’s time to apply that consumerism to dental care by taking advantage of the same shopping tools that the big insurance companies use.

*UCR stands for usual, customary and reasonable fees or, for our purposes, just think of it as the average charge of dentists in your area.