How Does Dental Insurance Work? Types and Coverage

You’ve got a toothache, maybe even a cavity. And if you have dental insurance, it can help reduce the cost of treatment when you visit a dentist.

Similar to health insurance, dental insurance may be provided through your employer, but you can also get dental insurance from dental insurance companies.

So, how does dental insurance work? It lowers the out-of-pocket costs for services like crowns, fillings, root canals and dentures.

Sandra Goldbach, a patient financial counselor, explains how dental insurance works and the various types of dental insurance available.

What is dental insurance?

Dental health insurance is a contract between you as a patient and the dental insurance plan you choose. Dental health benefit plans vary widely because each involves a negotiated contract between you or your employer, the dentist providing the care, a dental insurance carrier and sometimes an administrator responsible for processing and payment of claims. Your dentist as the provider has little impact on the assignment of benefits in your plan.

“Dental insurance is a valuable benefit to have. It allows for preventive care services on a regular basis to catch dental issues early when they are most treatable. Dental insurance also covers a portion of minor dental repairs like restorations,” explains Goldbach.

“Most plans will cover a percentage of major dental treatment, which tends to be the costliest and most extensive, but is so necessary in preserving the oral health of the patient. Oral health is paramount for the overall health of all people from nutritional needs to maintaining an infection-free mouth not allowing spread to other parts of the body.”

Types of dental insurance

Dental insurance benefits are designed in several ways. You should know how your plan is designed, as this can significantly affect the plan’s coverage and your out-of-pocket expenses. Although the individual features of plans might differ somewhat, the most common designs can be grouped into the following categories:

Direct reimbursement programs

This program reimburses you a pre-determined percentage of the total dollar amount spent on dental care, regardless of treatment category. This method typically doesn’t exclude coverage based on the type of treatment needed, allows you to go to the dentist of your choice and provides incentive for you to work with the dentist toward healthy and economically fair solutions.

‘Usual, customary and reasonable’ (UCR) programs

These vary between contracted provider to contracted provider. Each dentist may have their own individual agreement with the insurance plan. A UCR usually allows you to go to the dentist of your choice. These plans pay a set percentage of the dentist’s fee or the plan administrator’s “reasonable” or “customary” fee limit, whichever is less. These limits might or might not accurately reflect the fees that area dentists charge. There are wide variations and lack of government regulation on how a plan determines the “customary” fee level.

Table or schedule of allowance programs

This type of program determines a list of covered services with an assigned dollar amount. That dollar amount represents just how much the plan will pay for those services that are covered, regardless of the fee charged by the dentist. The difference between the allowed charge and the dentist’s fee is billed to the patient.

Capitation programs

Capitation programs pay contracted dentists a fixed amount per enrolled family or patient. In return, the dentists agree to provide specific types of treatment to you at no charge. (For some treatments, there might be a co-payment.) The capitation premium that is paid might differ greatly from the amount the plan provides for your actual dental care.

What does dental insurance cover?

Dental insurance typically covers the following categories:

• Preventive care. This can include bi-annual cleanings, routine X-rays and oral screenings with the goal of preventing general wear and tear.
• Basic care. Services typically covered under basic care include fillings, tooth extractions, root canals and gum disease treatment.
• Major care. This includes dental restoration like a crown or surgical procedures like an implant, dentures and other kinds of oral surgery.

“In most comprehensive dental insurance plans, preventive services are covered 100% with a frequency limit based on the number of times per year or within so many months per cycle,” says Goldbach. “This is dependent on benefit dollars available.”

Here’s a common scenario: You’ve used all of your benefit dollars for the calendar year. But you’ve only had one cleaning for the year, though you’re entitled to two cleanings. If you choose to have a second cleaning, you’ll be responsible for the fees.

“This is one of the most misunderstood aspects of coverage,” notes Goldbach.

Minor dental treatments like a restoration are often covered at 80%, leaving 20% co-insurance as patient liability. Major dental treatments are more often covered at 50% of the fee. For contracted insurance the percentage is related to the UCR contracted fee.

What isn’t covered?

To control dental treatment costs, most plans limit the amount of care you can receive in a given year. This is done by placing a dollar cap — usually referred to as the “plan maximum benefit” — or limit on the amount of benefits you can receive, or by restricting the number or type of services that are covered. Some plans might totally exclude certain services or treatments to lower costs. And some plans have services only offered once in a lifetime. Find out specifically what services your plan covers and excludes.

There are, however, certain limitations and exclusions in most dental benefits plans that are designed to keep dentistry’s costs from going up without penalizing you. All plans exclude experimental procedures and services not performed by or under the supervision of a dentist, but there might be some less obvious exclusions.

An exclusion exemption may be an implant and the crown that follows. Some procedures like a crown may be limited to once every five to seven years.

“For these reasons, it’s always important for you to be aware of your policy benefits and limitations,” advises Goldbach.

Additionally, cosmetic procedures like veneers are typically excluded from insurance benefit coverage. If these are being done due to trauma or accident, they may be covered by your medical insurance.

Orthodontics is a specific category that may be covered depending on the policy. Some policies limit orthodontic treatment to 12 or 13 years of age. Other more comprehensive policies will allow for adult orthodontics.

“The most important thing to be aware of regarding orthodontic coverage is the total lifetime amount that the policy will pay out,” explains Goldbach. “The amount of benefit is significantly lower than what typical orthodontics cost, so the remainder of the costs will fall to patient liability.”

Sometimes, dental coverage and health insurance might overlap. Read and understand the conditions of your dental plan. Exclusions in your dental plan might be covered by your medical insurance.

Understanding insurance plans

Your dental insurance can be overwhelming and confusing.

Think about choosing a plan that imposes dollar or service limitations, rather than one that excludes categories of service. By doing so, you can receive the care that’s best for you and actively work with your dentist in the development of treatment plans that give the most and highest quality care.

To help you stretch each dental benefit dollar, most plans provide patients and purchasers with special administrative services. Find out if your plan provides the following mechanisms to help you budget, analyze and dispute, if necessary, the costs of your dental care:

• Predetermination of costs. Some plans encourage you or your dentist to submit a treatment proposal to the plan administrator before receiving treatment. After review, the plan administrator might determine your eligibility, the eligibility period, services covered, your required co-payment and the maximum limitation. Some plans require pre-determination for treatment exceeding a specified dollar amount. This process is also known as pre-authorization, pre-treatment review or pre-treatment estimate (as with all insurance, this estimate is not a guarantee of payment).
• Annual benefits limitations. To help contain costs, your plan might limit your benefits by 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, patients and dentists can be resolved, eliminating many costly court cases. Peer review is established to ensure fairness, individual case consideration and a thorough examination of records, treatment procedures and results. Most disputes can be resolved satisfactorily for all parties.
• Premium adjustments and re-evaluations. 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.
• Coordination of benefits. If you’re 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. In some cases, you might be assured full coverage where plan benefits overlap and receive a benefit from one plan where the other plan lists an exclusion.

What is a premium?

A premium is the set amount that you pay a dental insurer for coverage. Most times, the amount will be deducted from your paycheck, but some policies may collect payment semiannually or annually.

Many employer-based dental insurance will offer a choice of coverage options. Each option will allow for more or less coverage depending on the premium paid. Coverage options include:

• An enhanced plan (PPO). This has the highest premium, more total benefit dollars per year and covers a wider range of treatments.
• A traditional plan (PPO). This is the middle-of-the-road choice that covers many of the most needed services. The premium for this plan is less than enhanced.
• A preventive plan (PPO). This is limited to a low benefit dollar amount and covers only preventive services and possibly some minor dental repairs. This plan has the lowest premium, along with the least coverage.
• DHMO (dental health maintenance organization) plans. At times these are even lower than the preventive coverage. But this plan limits you to seeing ONLY dentists in the network for treatment to be covered.

What is a deductible?

This is the amount you must pay for your dental expenses before your insurance will provide coverage. It’s common for your deductible to reset after 12 months.

“A deductible is a set amount (for example, $50 per year) and is assessed on the first procedure done within the benefit year,” explains Goldbach.

What is coinsurance?

After you meet your deductible, co-insurance is the amount or percentage you’ll pay versus what your dental insurance plan will cover.

“For instance, a filling that costs $100 may be covered by insurance at 80% ($80) and this will leave a co-insurance amount of $20 (20%) for you to cover,” Goldbach illustrates. “Co-insurance helps to keep the policy premiums lower and helps to stretch out the yearly benefit dollars as well.”

What is a waiting period?

This is a set amount of time before your dental insurance will provide full coverage on certain procedures. The amount of time can vary from plan to plan — anywhere from a few months to more than a year.

How to get dental insurance

In many cases, your employer should offer dental insurance. And there are typically a few different options. If you haven’t signed up for dental insurance before, you may need to wait for the open enrollment period.

You want to ask yourself the following questions when determining what type of dental insurance is best for you:

• 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 restricted to a panel, is your dentist on this panel?
• Who controls treatment decisions — you and your dentist or the dental plan? Some plans might require dentists to follow the “least expensive alternative treatment approach.”
• Does the plan cover diagnostic, preventive and emergency services? If so, to what extent? What are the specific intervals for prevention and diagnostic treatment (such as cleaning, full-mouth X-rays, exams)?
• What routine treatment is covered by the dental plan? What share of the cost will be yours?
• What major dental care is covered by the plan? What percentage of these costs will you be required to pay?
• What are the plan’s limitations (a limit to the benefits for a procedure or the number of times a procedure will be covered) and exclusions (denied coverage for certain procedures)?
• Will the plan allow referrals to dental specialists? Will my dentist and I be able to choose the specialist?
• Can you see the dentist when you need to and schedule appointment times convenient for you?
• Who’s eligible for coverage under the plan and when does coverage go into effect?
• Are there any defined waiting periods before the dental insurance will pay out benefits for minor and routine procedures, as well as major procedures?
• What are the specific intervals for major dental procedures such as crowns, fixed partial dentures, removable partial/full dentures?
• Are there any pre-existing clauses with reference to treatment otherwise covered?

“In choosing an insurance plan, whether through an employer or as an individual, it’s important to understand the policy in relation to your dental needs,” reiterates Goldbach. “I suggest obtaining a copy of the policy and read through its limitations, exclusions and particulars regarding waiting periods and benefit coverage. It’s helpful to know your needs or expected needs to compare the coverage.”

What if I don’t have dental insurance?

No dental insurance? If you don’t have dental insurance and need to receive treatment, there are options available:

• Dental schools. These schools typically offer free or discounted treatment to help train students learning dentistry.
• Public dental clinics. These are typically run by local or state health departments and charge fixed prices based on your income.
• Free dental clinics. This can include nonprofit clinics or organizations that offer donated services.
• Government dental coverage. Medicaid may be an option for you based on your employment status and how much you earn.

Bottom line?

It’s important to keep your teeth and gums healthy and stay on top of your oral hygiene — and dental insurance is a great option to help lower your out-of-pocket costs and it allows you to stay up-to-date on your preventive care.

“Your oral health is more important than you may realize,” says Goldbach. “Oral health is said to be a window into one’s overall health.”