It can waste your money if your plan doesn’t match your needs
There’s no question that dental work is expensive—especially when you need to have major work done, which is why so many people eventually ask themselves, “Should I get dental insurance?” If you’re not covered through your job, you may have to purchase it on your own. However, purchased individually, dental insurance can be a waste of money if your plan doesn’t match your needs.
Let’s look at how to drill through these plans to find out if dental insurance is right for you.
- Dental insurance purchased individually, as opposed to participation in an employer-sponsored group plan, isn’t always worth the cost.
- The coverage usually has an annual maximum limit, and certain procedures have hefty co-insurance payments.
- Some procedures, such as orthodonture and cosmetic dentistry, aren’t covered at all.
Overview of Dental Insurance
First, here’s a breakdown of how individual dental insurance works. You select a plan based on the providers (dentists) who you want to be able to visit and what you can afford to pay.
- If you already have a dentist you like and they are in the insurance company’s network, you’ll be able to opt for one of the less expensive plans.
- If you don’t have a dentist at all, you can choose from any of the dentists who are in the network and again have the option of a less expensive plan.
- If your existing dentist is not in the network, you can still get insurance, but you’ll pay significantly more to see an out-of-network provider—so much more that you may not have any chance at coming out ahead by being insured.
The monthly premiums will depend on the insurance company, your location, and the plan that you choose. For many people, the monthly premium will be around $50 a month.1 This means that you’re spending $600 on dental costs each year even if you don’t get any work done.
Is Dental Insurance Worth It?
Now, you may think that most people don’t come out ahead with most kinds of insurance, and you may be right. After all, if insurance companies didn’t make a profit, then they would all go out of business. Insurance is designed to protect you in a worst-case scenario.
Dental insurance is significantly different from most other kinds of insurance, however. With health insurance or homeowners insurance, for example, the potential downside is so high that almost no one can afford the risk of not being insured. With dental insurance, the potential downside is fairly low—as is the potential upside.
In a good year, when you only need the standard cleanings, exams, and X-rays that make up good preventive care, you could lose money by having dental insurance. For example, if you paid out of pocket for these services, you might spend around $400 for the year, whereas you might spend $600 for the year on insurance premiums.
Older adults represent a group that may find it worthwhile to enroll in a dental insurance plan. Dental insurance for seniors is similar to plans for other individuals but focuses on the types of coverage that seniors may need. These include crowns, root canals, dentures, and tooth replacements. Even though these coverages are not unique to older individuals, there is a higher probability that seniors will need one or more of these procedures. Note that seniors on Medicare may require a different dental insurance plan than those without it.
Will It Be There When You Need It?
What about when you need some work done? In a really bad year, your dentist could inform you that you need a couple of fillings, a root canal, and a crown. On top of that, you’ll still have to pay for your usual cleanings, exams, and X-rays. This is the time to be insured, right? That depends.2
Unfortunately, your insurance may not be as helpful as you would expect. Some dental insurance plans have low annual maximums of around $1,000 (this will vary by plan and provider, of course). Once your dental bills exceed $1,000 in any given year, you’re stuck paying the rest of the bills in full. The insurer won’t pay for more than $1,000 in treatment.
You may still pay a lower negotiated fee for the work that you need as a benefit of having insurance, but even negotiated fees could be quite high. For example, if the dentist’s regular fee for a filling is $150, then the negotiated fee might be $100. In this situation, your regular oral maintenance and fillings could use up most or all of your annual maximum, so only a fraction of your large dental-work bill might actually be covered. You might still pay $1,000 to $2,000 out of pocket, plus your annual $600 in premiums.
On top of that, while you may pay 0% in co-insurance on preventive maintenance and 20% on fillings, root canals, and extractions, the policyholder’s share of expensive procedures such as crowns, bridges, and implants tends to be a whopping 50%. This is known in the industry as the 100-80-50 coverage structure.3 Even if you haven’t used up your annual maximum by the time you need the expensive procedure, you’ll still have to pay several hundred dollars for it.
What’s Not Covered
Dental insurance also rarely covers expensive procedures such as orthodontics and cosmetic dentistry, even if you try to argue that you need a procedure to alleviate emotional pain and suffering. When insurance does cover them, the annual maximums still often prevent you from saving very much, if anything, after you factor in your biannual cleanings and exams.4
Most dental insurance plans have a waiting period during which major procedures are not covered for a year after the plan begins, with minor ones not covered for three months.
Waiting Won’t Work
If you think that you’ll just hold out and purchase dental insurance when you need it, think again. Because of what’s called a waiting or probationary period, this strategy won’t work (you didn’t really think that you had found a way to outsmart the insurance companies, did you?). Waiting periods mean that, for example, one year after you first become insured, your insurance will not cover any major work (such as crowns or root canals), and for three months after you first become insured, it won’t pay for any minor work (such as fillings). Waiting periods vary by policy.5
Insurance companies know that when you need a filling or a crown, you need it now—you won’t be able to find out that you need a crown, buy insurance, wait 12 months, and then get it taken care of. If you tried to do that, you would probably suffer from a lot of discomfort and ultimately lose your tooth (and have to pay full price for that extraction).
Even with employer-sponsored group plans, it’s important to scrutinize plan details to find out if it is cost effective for your particular situation.
Considerations for Group Plans
Surprisingly, even if your employer offers dental insurance, you might be better off skipping it. Many people assume that employer-sponsored benefits are automatically a good deal because you’re receiving a group rate, but this isn’t necessarily true.
When evaluating your employer’s dental plan, make sure to examine the monthly payments, the annual maximum, and the co-insurance. Your employer may offer you a great plan that’s only $20 a month to cover your entire family with a generous annual maximum, or a mediocre plan that’s $50 a month with a $1,000 annual maximum. With the former, you can really benefit, but with the latter, you could be wasting your money. Do the math for your own situation to determine whether you’re likely to come out ahead.
One situation where it can make sense to get dental insurance regardless of whether it seems like a good deal in the long run is if you are living from paycheck to paycheck with little or no money saved. When you don’t have dental insurance, you have to be able to pay a $1,600 bill when you have the work done (if not in full, then in prompt installments). If you can’t do it, and your options are to overpay for dental insurance, neglect your only set of teeth, or put dental work on a credit card that you’ll have trouble paying off, then your best bet is to get the insurance. You’ll probably waste less money on insurance than you would paying interest on a credit card or letting your dental health deteriorate.
If you can’t participate in a quality group dental plan—either a preferred provider plan (PPO) or a dental health maintenance organization (DHMO)—then the best way to come out ahead on dental expenses may be to pay for everything out of pocket. Brushing and flossing regularly, switching to an inexpensive electric toothbrush, getting professional cleanings every six months, and going to a dentist who does high-quality work that lasts for years can be the most effective ways to save money in the long run.