There's really no such thing as dental insurance.
With traditional health coverage, individuals bet they won't end up paying more in premiums than they get back. The insurer, on the other hand, bets that a policy holder won't have a catastrophe.
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Dental is different. For starters, the annual maximum payouts are low -- $1,000 to $2,000. That means with pricey procedures, such as root canals or tooth extractions, one quickly ends up paying out-of-pocket. The actual risk the companies take on is pretty minimal, experts say. Even though regular checkups are fully covered, not everyone goes twice a year as recommended. Dental benefits providers pocket those unused dollars.
And those low payout caps? Dentists say they haven't changed since the late 1970s. If they had risen with inflation, they'd be closer to $4,000 to $8,000 today.
To get a better understanding, I called Delta Dental, which provides 56 million Americans with coverage, and asked why their product is called insurance. "We typically refer to it as dental benefits," said spokesman Chris Pyle. While there's no official policy on the term, they "try not to refer to it as insurance," he said, adding, "technically, we're a not-for-profit dental service corporation."
What about the low ceiling on annual caps? "We could have a $10,000 annual max, but no one would be able to afford it," said Pyle. Delta, he points out, imposes whatever caps are requested by the companies. The company declined to estimate what the premiums would be for someone in a group with a $10,000 annual cap.
For its part, the National Association of Dental Providers said that less than 3% of enrollees met or exceeded their cap in 2009, according to their most recent survey. Pyle says that percentage hasn't changed much over time. "If people in the 70's weren't reaching their annual max very often, and yet today still are not, it seems to indicate that there's not a big problem with the annual maximum levels."
The stakes are high. Roughly one quarter of Americans over age 65 have lost all their teeth, according to a recent Senate report. But for those who have maxed out their dental benefits -- or are part of the estimated 42% of Americans who don't have any -- there are other options. A few firms operate on the Costco model: customers pay an annual membership fee of $75 to $150 in exchange for access to the network of dentists with whom they've pre-negotiated discounted prices. Some of the players include Northeast Dental Plan, Careington, Brighter.com, and dentalplans.com.
For example, at Brighter.com, if you wanted to get three crowns replaced, first you enter your zip code. A list appears showing nearby dentists from a network of 25,000 (a number that's increasing to 70,000 in June, says CEO Jake Winebaum). The average local retail rates for dental procedures display, alongside the pre-negotiated Brighter.com rates, which company reps say are typically up to 60% lower than what you would get as an uninsured patient. One crown in my Brooklyn zip code retails for $1,306, while the Brighter rate is $595. So for three crowns that's an out-of-pocket cost of $1,785.
In contrast, if I got traditional dental benefits on my own through the Freelancers Union as provided by Guardian Life Insurance, the provider would negotiate a discount off the retail cost to get to $724 each, then pay 50% of the total. I would end up paying $1172 out-of-pocket. Then there's the $712.08 per year in premiums. All told, for this particular procedure, that's not much more expensive, $1884.08 to Brighter's $1864. But I've also reached my $1,000 max annual benefit, so I'll have to wait until next year to get more work done, or pay for it completely myself. Dr. Richard Goren, DDS, and Guardian's 2nd VP of Group Dental, says traditional dental benefits offer "safer, more sure" coverage and that "discount plans are fine for people with no other options."
However, the rates posted on dental price clubs "can be misleading to patients," said Dr. Jeffrey Kramer, who owns a private practice in Brooklyn. For instance, the rate posted online for crowns may not reflect fluctuations in the price of gold, or higher lab fees. "They come in with the list printed out in their hand expecting to pay a certain price," said Kramer, and it leads to "squabbling" with the patients.
Brighter.com said they update their fee lists quarterly to make sure they reflect current market conditions. "It doesn't change that much within a quarter," Winebaum said. "We're about to swap out our current pricing database with a new one that will be even more extensive in terms of the number of claims that we analyze."
In the final analysis, experts say the new companies might be worth a look. With regular dental coverage, it's usually impossible to get back more than the cost of the premiums (because of co-pays and maximum annual reimbursements). In that sense, dental insurance is a form of pre-payment. But rather than gamble on how much coverage you might need, or wait to get all your work done, a discount plan may be a better deal to pay for, and get, your dental care when you need it.
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