Consumer's Guide to Dental Insurance and Benefits

Dental insurance is confusing to many people.  Dental insurance can provide welcome assistance in meeting the costs of dental care.  But no dental insurance can, or does, entirely cover the costs of meeting all necessary dental care. 

This guide provides information (in depth) on the inner working of dental insurance plans as well as how they can affect dental care.  Before delving into the details, we recommend reviewing more concise insurance information on the prior page.

Some of the following information has been published by the California Dental Association under the title "What everyone should know about selecting and using dental benefits." 

Caveat Emptor (Let the Buyer Beware)

Insurance companies are businesses operating to make a profit.  This is their primary motive in writing dental insurance contracts with employers or the pubic directly.  They are not interested, first and foremost, in your dental health or your economic well being.

Like any purchase, the consumer is well advised to understand the true nature of dental insurance coverage - particularly if paying for the insurance out of pocket or through a program of employee benefits.  Insurance agents selling medical insurance coverage to employers have been known to add a low cost dental plan to sweeten the deal.  Employers are also well advised to understand exactly what they are purchasing.

Protect yourself when buying or using dental insurance by getting the facts.

Don't make the mistake of letting your insurance policy or carrier make treatment decisions for you - use the advice and recommendations of a carefully selected, trusted dentist to help you make your own decisions about what treatment is best for you.

Health Insurance is Commonly Misunderstood

It is quite natural to think about health insurance as a means to cover the costs of treatment for serious medical conditions or accidents. But there's another type of health coverage -- dental insurance. Because dental disease is so common, dental insurance may be helpful for you and your family.  Many people misunderstand dental insurance plans and mistakenly think any dental needs they have will be covered by insurance.

There's a World of Difference Between Medical & Dental Disease

Unlike medical disease, which can be both unpredictable and catastrophic, most dental ailments are preventable. Preventive care, including regular checkups and cleanings, is the key to maintaining your oral health.

With regular visits to the dentist, problems can be diagnosed early and treated without extensive testing or elaborate and expensive procedures. That keeps the costs of dental care much lower than those of medical care. In fact, total spending for dental care is decreasing. In 1970, it made up 6.3 percent of total healthcare expenditures. But in 1991, dental care's share of health care spending was only 4.9 percent.  This trend continued during the following decade as well.

Medical & Dental Benefits Differ, Too

Medical insurance is immensely profitable because insurance premiums are paid for many years by many people who rarely get a serious illness.  The total premiums collected each year always exceed the insurance company payouts for those that do require medical attention.  So medical insurance can cover costly illnesses, while the insurance companies make a profit.

But everyone needs periodic dental examinations and preventive care.  Most people have untreated dental problems that require care as well.  If everyone sought treatment for their dental needs, dental insurance premiums wouldn't come close to meeting the total cost of the care.  Insurance companies realize less than half of Americans even have a dentist, and few of those with a dentist seek the care they need.

Since most people covered by dental insurance won't be submitting claims insurance carriers make easy money on their premiums.  Dental insurance companies exist to make a profit and they also do this by limiting the conditions and procedures covered for people who do submit claims for care.  Claims examiners, who have no professional credentials, routinely deny claims for dental conditions that are complex or costly to treat.  As a result, dental insurance operates more like automobile insurance plans, than medical insurance plans.

Different Types of Dental Insurance

There are different types of dental insurance plans and coverage.  Regardless of the dental benefits plan, there are usually three parties involved: you, the patient; the dentist providing care; and a third party with whom you or your employer contracts for coverage. If your options include a plan funded by your employer, you may have an administrator responsible for processing and payment of claims.

The primary responsibility of the third party is to provide the financial foundation for your dental benefits plan. There are three types of third parties:

Third Parties Often Limit Your Freedom to Select the Dentist Right for You

Without question, the best method of choosing a dentist is by reviewing the doctor's qualifications, visiting the office to make sure it is clean & modern, and interviewing the doctor for compatibility with your needs.  As an educated consumer, you are the best person to decide which dentist is right for you.

Dental benefits plans can be categorized by the options offered for selecting a dentist. Some plans allow you the freedom to choose your own dentist, while others, in exchange for lower rates, limit your choice. These two alternatives are called open and closed panel plans.

Open Panel Plans This type of dental benefits plan allows covered patients to receive care from any dentist and allows any dentist to participate. Any dentist may accept or refuse to treat patients enrolled in the plan. Open panel plans often are described as Freedom of Choice plans.

Closed Panel Plans This type of plan allows covered patients to receive care only from dentist who have signed a contract of participation with the third party. The third party contracts with a certain percentage of dentist within a particular geographic area. There are two types of closed panel plans.

Preferred Provider Organization (PPO)
This plan allows a particular group of patients to receive dental care from a defined panel of dentists.

The participating dentists agree to charge less than usual fees to this specific patient base, providing savings for the plan purchaser. Dentists are able to do this by placing limitations on the time they spend with patients, the types of procedures they offer, and the methods or materials used.  The savings comes from providing a lower level of care.

Other than agreeing to accept lower fees, dentists who are "preferred providers" have no special qualifications. If the patient chooses to see a dentist who is not designated as a "preferred provider," that patient may be required to pay a greater share of the fee-for-service.

Exclusive Provider Organization (EPO)
This closed panel plan allows a particular group of patients to receive dental care only from participating dentists. Although there may be some exceptions for emergency and out-of-area care, if a patient decides to see a dentist who is not listed on the EPO panel, charges for service will not be covered by the plan.

Since participating dentist is required to make substantial fee reductions, few dentists elect to participate in EPO-type plans because they are uncomfortable with the very limited treatment options this type of plan covers.

Under some benefits plans, participating dentists may even be salaried employees of the EPO. This presents a potential conflict of interest for the employed dentist - do they put the patient first or their insurance company employer?  An EPO contracts with a limited number of practitioners within a geographic area. 

Access to necessary specialized care can be severely  restricted.  Dentist in the EPO may even pay a financial penalty when they need to refer to a specialist. The EPO also may limit the amount of services that a patient can receive in a given calendar year.

How Insurance Benefits Get Paid

When choosing a benefits plan, it is important to know who pays what to whom. Dental plans can be categorized into three types, based on the compensation method and treatment provided:

Indemnity Plans

This type of plan pays the patient or dentist on a traditional fee-for-service basis. A monthly premium is paid by the patient and/or the employer to an insurance carrier, which directly reimburses the dentist for the services provided. 

Insurance companies usually pay between 50 percent and 80 percent of fees for covered services; the remaining 20 percent to 50 percent is paid by the patient. But, the schedule of fees is determined by the insurance coverage purchased and varies from policy to policy. These plans often have a pre-determined deductible, a dollar amount that varies from plan to plan, that the patient must pay before the insurance carrier will begin paying for care. Indemnity plans also can limit the amount of services covered within a given year and pay the dentist based on a variety of fee schedules.

Capitation Plans

This type of plan provides comprehensive dental care to enrolled patients through designated provider dentists. A Dental Health Maintenance Organization (DHMO) is a common example of a capitation plan. The dentist is paid on a per capita (per head) basis rather than for actual treatment provided. Participating dentists receive a fixed monthly fee based on the number of patients assigned to the office (whether they treat the patients or not).  In addition to premiums, patient co-payments may be required for each visit.

This type of plan has a built in financial incentive for dentists to avoid diagnosing, recommending or providing treatment that may be necessary or beneficial to the patient.  There is also financial pressure on participating dentists to cut corners in treatment to lower their overhead. The potential conflict of patient and doctor interest under capitation plans is why many doctors refuse to sign contracts with insurers to become participating dentists.

Direct Reimbursement Plans

Under this self-funded plan, an employer or company sponsor pays for dental care with its own funds, rather than paying premiums to an insurance carrier or third party. The patient pays the dentist directly and, once furnished with a receipt showing payment and services received, the employer reimburses the employee a flat fixed percentage of the dental care costs. The plan may limit the amount of dollars an employee can spend on dental care within a given year, but often places no limit on services provided. Patients can select a dentist of their choice and, in conjunction with the dentist, can play an active role in planning the treatment most appropriate and affordable to ensure optimum oral health.

How Benefit Coverage is Calculated

A clear understanding of the methods used to calculate benefits and payments would allow you to compare and evaluate the purchasing power of different plans. Insurance companies don't make this simple.  They use a system based on payment schedules to calculate benefits.  Insurance payment schedules are created by insurance companies.  Don't confuse the insurance terminology for "payment schedule"  with the actual fees charged by dental offices - these are two different things.  The following are four common payment schedule schemes used:

Capitation (per capita) payment schedules

This fee schedule is used by plans structured to provide a predefined level of benefits. Because dental care needs vary by individual, it is critical to have a thorough understanding of the level or range of services "defined" or covered by the plan. Under this fee schedule, the patient is responsible to pay for treatment not covered within the scope of the plan.

In some cases, the allocated payment a dentist receives from the benefits plan, including patient co-payments, is less than the actual cost of providing care. Patients often settle for less-than-optimal treatment alternatives or postpone necessary services when their co-payments do not cover all possible options.

Table or Schedule of Allowances

Plans using this form of benefits calculation establish a maximum dollar limit for each covered procedure, regardless of the fee charged by the dentist. If you select a plan that uses this type of table or schedule, ask how often the table is adjusted for inflation or for changes in accepted dental procedures. In these plans, the difference between the allowed charge and the dentist's fee is paid directly by the patient.

Patients should understand that contracted fee reductions listed in some plan allowance schedules could significantly diminish the level and quality of care delivered.

Contracted rates are based on the size of the patient population and projections of the amount and type of treatment performed within a given time frame.

Since cost control drives this payment approach, your ability to choose your dentist or see a specialist may be quite limited.

Direct Reimbursement

In this self-funded plan, the patient pays the doctor for services. The employer or plan sponsor reimburses the employee for a predetermined percentage of all costs. Under this fee schedule, the employee has an incentive to work with the dentist to plan healthy and economical solutions.

Usual, Customary and Reasonable (UCR)

Most indemnity (traditional fee-for-service) plans use this payment schedule. It allows patients to select their own dentist. The UCR schedule pays benefits based on a fixed percentage of the lesser of the dentist's fee or the fee determined by the insurance carrier to be "usual," "customary" or "reasonable" for the service in the community in which the service was delivered. 

Note that the amount insurance companies consider to be usual, customary, or reasonable are generally not usual, customary or reasonable dental office fees.  Insurance companies keep their methods of setting UCR amounts a closely guarded proprietary secret.

Wide fluctuations in UCR fees between communities and even between different dentists in the same community have made this payment system highly controversial. Because many insurance carriers set the UCR percentage too low in comparison to the area's usual professional fees, patients may wind up paying more out-of-pocket. Payments can be made directly to the dentist, or to the beneficiary (the insured person).

The American Dental Association filed a class-action civil lawsuit against Aetna, a large insurance company that provides dental insurance plans in August 2001.  After two years of legal battles in August 2003,  Aetna agreed to a court approved settlement to refund over four million dollars in underpayments on dental insurance claims, and to pay one million dollars in punitive damages to the ADA Foundation (devoted to charitable work related to dental care).  Aetna recently settled a similar suit with physicians.  Aetna also agreed to use a new explanation of benefits in communications with patients.  In the past, when a dentist's fee was reduced, patients were told that payment for the procedure:

 "reflects Aetna's determination of the usual and customary charge in for area for this service."

This lead many consumers to mistakenly believe that their doctor's fee was "unusual, not customary and, therefore, excessive and unreasonable.  As a result of litigation Aetna has adopted a new explanation of benefits that states:

"Your plan provides benefits for covered services at the prevailing charge level, as determined by Aetna pursuant to the terms of your contract.  Aetna's determination of the prevailing charge does not suggest that your provider's fee is not reasonable or proper."

A variety of other illegal or unethical business practices in processing and payment of dental insurance claims by Aetna will also be changed as a result of this settlement.  

Dental Plans Have Limitations and Exclusions

Today's health insurance, including your dental plan, is designed to help you get the care you need at a reasonable cost. Because each person's oral health is different, costs can vary widely. To control dental treatment costs, most plans will limit the amount of care you can receive in a given year. This is done by placing a dollar limit or "cap" on the amount of benefits you can receive, and by restricting the number or type of services that are covered. Some plans may totally exclude certain services or treatment to lower costs.  Know specifically what services your plan covers and excludes.

There are also certain limitations and exclusions in most dental benefits plans that are designed to keep costs from going up. All plans exclude experimental procedures.  Many plans consider innovations in dentistry to be experimental, long after they have become widely accepted by the dental profession.  Plans usually exclude services not performed by or under the supervision of a dentist, but there may be some less obvious exclusions. Sometimes dental coverage and health insurance may overlap.  Exclusions in your dental plan may be covered by your medical insurance. The only way to understand limitations and exclusions is to read and understand the conditions of your dental plan (usually in the tiny print).

Consumers are encouraged to choose plans that impose dollar or service limitations, rather than those that exclude categories of service. By doing so, you can receive the care that's best for you and actively participate with the dentist in the development of treatment plans that give the most and highest quality care.

Many doctors base their recommendations on your coverage, not your needs!

Please n

When Choices are Elusive
(Reprinted from the New York Times, July 2003)

Almost a third of doctors surveyed said they had not told patients about useful treatments because they believed that patients' insurance would not cover them, according to a recent study.

The practice raises serious ethical issues and appears to be becoming more prevalent, researchers say in the journal Health Affairs (July 2003 issue).

"As a general rule, the proper thing to do in every instance is to be honest with the patient about what the appropriate options are, whether they're covered or not, " said the lead author of the study, Dr. Matthew K. Wynia.  An infectious disease specialist, Dr. Wynia is the director of the Institute for Ethics at the American Medical Association.

Other Tricks to Reduce Claims Payments

Insurance carriers use a variety of other methods to reduce their payment of dental claims.  Most plans also provide patients and purchasers with special administrative services that are helpful in limiting payouts. Find out if your plan uses any of the following mechanisms to help you analyze and dispute, if necessary, coverage for  your dental care.

Predetermination of Costs ("preauthorization")

Some plans encourage you, or your dentist, to submit a treatment proposal to the plan administrator (insurance company clerks without professional credentials) before receiving treatment. After review, the plan administrator may determine the patient's eligibility; the eligibility period; services covered; the patient's required co-payment; and the maximum limitation on payment.

Every predetermination by the insurance company carries a disclaimer indicating that the preauthorization is only an estimate of benefits - not a promise by the insurance carrier to provide coverage when the preauthorized treatment is completed and submitted on an insurance claim. 

Some plans require predetermination for treatment exceeding a specified dollar amount. This process is known as preauthorization, pre-certification, pretreatment review or prior authorization. Although your dental benefits plan may not be bound to predetermined costs, this mechanism can help you and your dentist plan and budget a treatment plan appropriate to your oral health needs.

Most people who submit their dentist's plan of treatment for insurance company predetermination delay starting treatment while the company reviews information.  The process can take weeks or even months before the insurance company responds.  In the intervening period a significant number of patients lose interest in dental care.  Insurance company profits increase because claims are not submitted for treatment that is not received when needed.  Insurance companies that require predetermination use it as an effective method of increasing their profits by discouraging patients from getting the care they need.

Annual Benefits Limitations

To help contain costs, your plan may limit benefits to a certain number of procedures and/or dollar amount in a given year. In most cases, particularly if you've been getting regular preventive care, these limitations allow for adequate coverage. By knowing in advance what and how much your plan allows, you and your dentist can plan treatment that will minimize your out-of-pocket expenses while maximizing compensation offered by your benefits plan.

Peer Review for Dispute Resolution

Many plans provide a peer review mechanism through which disputes between third parties and patients can be resolved, eliminating many costly court cases for the insurance company. Peer review helps (within the limits of the insurance contract)  to ensure fairness, individual case consideration and a thorough examination of records, treatment procedures and results.

 When an insurance claim is submitted for peer review, the claim is reviewed by a dentist who is regularly employed by the insurance company for this purpose.  The dentist employed by the insurance company may speak with your treating dentist by telephone to clarify the type of care provided or needed.  When care by a dental specialist is being submitted for peer review, the insurance company should have a certified dental specialist with similar training to peer review the claim.  Sometimes this does not happen.

The insurance company's employed dentist determines whether the insurance company has to pay the claim under the terms of the insurance contract. 

Premium adjustments and Reevaluations

Patients and plan purchasers should insist on regular reviews of premium levels to ensure that UCR or Table of Allowances payment schedules are equitable. This analysis can help optimize your benefit levels, ensuring that every dollar you spend is used wisely.  Insurance carriers don't make many promises in this regard.

Coordination of Benefits

If you are covered under two dental benefits plans, notify the administrator or carrier of your primary plan about your dual coverage status. Plan benefits coordination can help protect your rights and maximize your entitled benefits. They also prevent insured parties from getting covered twice for the same treatment when they are covered by two policies.  In some cases you may be granted more complete coverage where plan benefits overlap, or receive a benefit from one plan where the other plan lists an exclusion.

Factors to Consider When Choosing or Using Your Dental Plan

What looks like a bargain today may not be a good buy in the long run. While your out-of-pocket costs are, of course, an important part of your decision-making process when choosing a dental plan, they are not the only criteria to use when evaluating your options. Your primary focus should be to determine whether the coverage would satisfy your dental care needs.  If you have a choice of whether to purchase dental insurance coverage or not, you might be better off paying for your care directly and forgoing the expense of dental insurance premiums and the minimal reimbursement of submitted insurance claims.  Consider the following:

Does the plan give you the freedom to choose your own dentist or are you restricted to a panel of dentists selected by the insurance company?

If you have a family dentist with whom you are satisfied, consider the effects changing dentists will have on the quality or quantity of care you receive. Because regular visits to the dentist reduce the likelihood of developing serious dental disease, it's best to have and maintain an established relationship with a dentist you trust.

Who controls treatment decisions -- you and your dentist or the dental plan?

Many plans require dentists to follow treatment plans that rely on a Least Expensive Alternative Treatment (LEAT) approach. If there are multiple treatment options for a specific condition, the plan will pay for the least expensive treatment option. If you choose a treatment option that may better suit your individual needs and your long-term oral health, you will be responsible for paying the difference in costs. It's important to know who makes the treatment decisions under your plan. These cost control measures may have an impact on the quality of care you'll receive.

Does the plan cover diagnostic, preventive and emergency services?
          If so, to what extent?

Most dental plans provide coverage for selected diagnostic services, preventive care and emergency treatment that are basic for maintaining good oral health. But the extent or frequency of the services covered by some plans may be limited. Depending upon your individual oral health needs, you may be required to pay the dentist directly for a portion of this basic care. Find out how much treatment is allowed in any given year without cost to you, and how much you will have to pay for yourself. Every dental care plan is different. It's your responsibility to be informed about what your specific plan will cover. As a basis of comparison, the following services are typically covered for the average patient:

Initial oral examination --- once per dentist

Recall examinations -- twice per year

Complete x-ray survey -- once every three years

Cavity-detecting bite-wing x-rays -- once per year

Prophylaxis, or teeth cleaning -- twice per year

Topical fluoride treatment -- twice per year

Sealants -- for those under age 18

What routine corrective treatment is covered by the dental plan?
         What share of the costs will be yours?

While preventive care lessens the risk of serious dental disease, additional treatment may be required to ensure optimal health. A broad range of treatment can be defined as routine. Most plans cover 70 percent to 80 percent of such treatment. Patients are responsible for the remaining costs. Examples of such routine care include:

Restorative care	amalgam and composite resin fillings and stainless steel crowns on primary teeth
Endodontics	treatment of root canals and removal of tooth nerves
Periodontics	treatment of uncomplicated periodontal disease including scaling, root planing and management of acute infections or lesions
Oral surgery	tooth removal (not including bony impaction) and minor surgical procedures such as tissue biopsy and drainage of minor oral infections
Prosthodontics	repair and/or relining or reseating of existing dentures and bridges

Understand what routine dental care is covered by the plan, and what percentage of the costs will come out of your pocket.