UBP blog

07/15/2009

With traditional dental insurance, you get what you pay for

One thing people don’t realize about traditional dental insurance is that enrolling in a plan with lower premium costs could (and in most cases does) mean higher out-of-pocket expenses on dental procedures.

For example, one dental insurance plan may charge an individual $40 per-month in premiums and pay 50% coinsurance on all Type 3 or Major Restorative procedures. Another plan may charge an individual $48 per-month and pay 50% coinsurance on all Type 3 procedures.

The first plan may look like the most attractive one at first glance, before one major, often overlooked piece of information is even considered. If a dental insurance carrier pays a coinsurance of 50% on a Major Restorative procedure, does that mean they’re paying 50% of what the dentist charges for the procedure? In most cases, the answer is NO.

Insurance carriers determine how much they will pay on a dental claim by first looking at your company’s zip code and then determining what each dentist in the area charges for the procedure. They give each of the dentists’ fees a percentile rank and determine their coinsurance payment based on a chosen percentile. One carrier may base the cost they cover on the rates charged by a dentist in the 70th percentile, another might base it on what a dentist in the 90th percentile charges.

Knowing that a dental plan pays 50% coinsurance tells you very little. You need to know more information than this for a meaningful comparison of plan costs.

Do you know what percentile your plan carrier is using as their benchmark for paying dentists? It is important to know this when evaluating dental plans because lower premiums usually mean lower percentile pay outs and lower percentile pay outs mean your employees will pay more out of pocket when they visit the dentist.

In light of the current economy, we offer our clients free membership to Universal Dental Plan, a discount dental savings plan and alternative to dental insurance. Visit UDP’s website, http://www.universaldentalplan.com to learn more about the plan and call us to see if your company qualifies.

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