This Is How You Decide If Dental Insurance Is Worth It
Despite its limitations, dental insurance may be the most progressive insurance out there, in that it leans heavily on preventative care. Regular cleanings and examinations may prove to be what stands between you and big bills down the line. In that sense, while coverage of major procedures is often downright disappointing, a University of Maryland Dental School study shows you will end up ahead with dental insurance, because you will visit the dentist more often and that extra care will pay for itself.
Let's take a closer look at when dental insurance is worth it, and when it isn't.
You Can't Cheat the System
Insurance companies have anticipated the patient who has a sore tooth and no insurance, who signs up for a plan hoping to pay one $7 monthly premium and then stick the insurer for the bill for a $1,500 root canal. They do this by instituting waiting periods of 12 to 18 months before they will help with bills for anything beyond routine dental exams and by flipping the percentage of coverage from an average of 80% for check ups, cleanings, and X-rays to a measly 50% (or less!) for serious procedures, such as bridges or root canals.
If you want the coverage, you have to buy it before you need it.
A Very Painful Root Canal
What does this mean? If you buy a relatively expensive plan that runs $350 per year and test it with a $1,500 root canal procedure within a month or so, you will end up paying $350 plus $1,500, and you will have to cough up $100 for the annual deductible. You just paid $1,950 for a $1,500 procedure.
Now you have that same root canal, but you waited for the insurance on major procedures to kick in. In this case, you paid the annual premium of $350 twice and the deductibles twice, which is $900 right there. The insurance company pays 50% of a major procedure, so you end up paying another $750 or $1,650 for a $1,500 procedure.
Over Time You Benefit From the Benefits
Is that your last trip to a dentist? Most likely not.
As an insured patient, you will now make an average of 2.83 visits per year to the dentist compared to an average of 2.49 visits per year for someone without insurance. You'll also make fewer visits for expensive dental care — .83 visits versus 1.58. As a result, you are now part of a statistical pool that pays $560 per year on dental expenses, while the uninsured group pays an average of $822 per year on dental bills. The point is, the routine dental care does pay off to the tune of $262 per year. As the major procedures are never going to be covered generously, anyway, the quicker you start getting regular check-ups and cleanings the better. After all, this might prevent that root canal from ever showing up in the first place.
Other Options to Consider
One option to consider is a discount plan. This is not insurance. This is a group of people who negotiate a discount with one or more dentists, usually a small network. For annual membership dues of $100 or more, you simply get a percentage reduction on your bills — generally 15% or so. For this, there are no deductible payments, no co-pays, no paperwork. Just a straight discount.
Another way to save is with a Health Savings Account. This is a federal program administered by local banks. Basically, with limits $3,300 per year for an individual and $6,550 for families, you start an income-tax-free account that can only be used for qualified medical bills. Here, the math is simple. If you are in a 25% income tax bracket, you would normally pay $825 in tax on $3,300 and $1,670.50 on the family limit of $6,550. In some cases, dental insurance premiums qualify as medical bills recognized by the HSA plan. That puts you ahead before the year even starts.
Take Advantage of Employer Insurance
There are, in fact, some $7 per month plans for individuals, but you might be wise to check their benefits thoroughly against other options. In point of fact, 99% of dental plans are set up by employers so that those signing up can get the benefit of group rates. What does this tell you?
It tells you that there is a clear advantage to a group rate — so much so that it has been advised that employees ask their employer to set up an insurance plan for them. Even if the employer doesn't contribute a nickel, but just donates administrative time, it is worth it for those signing up.
Do you have dental insurance either through your own policy or through an employer? Does it pencil out for you? Please share in comments!