Dental Insurance: Why You Should Have It
Maybe you have never had a cavity and are wondering if dental insurance is worth it, or maybe it is open season (the time of year when you can enroll or change your insurance coverage), and you are determining whether to start your dental coverage. Regardless of your situation, it is important to understand the costs of your dental insurance and the benefits you will receive. The majority of dental plans are Preferred Provider Organizations (PPO) plans, so this article will focus on PPO plans.
Should I purchase dental insurance?
In short, yes, I recommend purchasing dental insurance, and here is why. First, we will assume your dental insurance plan is around $30 per month. This estimate will likely be close for most individual dental plans, but if you have a family, you can utilize this same process to determine the value of your plan. At $30 per month, you can expect to pay $360 per year. Included in this plan, you will typically receive the following fully-covered services every six months: dental exam, dental cleaning, and x-rays. If you have no dental issues, then you will go in twice per year and receive these services. At this point, you have essentially broken even or maybe saved a small amount from what you would have paid to receive these services twice during the year. While it is nice to know you are covered for these services and you know the yearly premium you will pay, you may be asking, why would I pay for insurance to pay the same amount as someone without insurance? The answer is the additional benefits you receive if you need anything beyond routine dental care.
Benefits of Preferred Provider Organizations (PPO)
When you have dental insurance, there will be a network of dentists and specialists (e.g. endodontists, oral surgeons, etc.) you can go to for service. Each of these dentists has a contract with the dental insurance provider. In this agreement, there is a maximum amount that can be charged for each service. If you did not have insurance, then the dentist would not be capped at this amount. For example, let’s say you need a bone graft after having a tooth extracted. Each dental service you receive has a corresponding procedure code or current dental terminology (CDT) code. In this case, the CDT for a bone graft is D6104. The dentist may bill $600 for a bone graft. However, the agreement with the insurance provider may have a maximum allowable amount of $200. In this case, you immediately save $400, but you will save even more than that because you are not responsible for the entire payment. The insurance provider will cover a portion.
How much will I pay for detal services?
In many cases, when you have dental work done, there will be multiple procedure codes. As a result, you must first find out the procedure codes for each service, then determine the maximum allowable amount for each procedure. You can find this out by calling your insurance provider and providing each procedure code. The provider will then tell you how much the dentist can charge. Once you have the maximum allowable amount, the next step is to find out how much is covered. The majority of dental insurances will cover around 50-60% of most services. In the case of the bone graft (D6104) for $200, if the insurance covered $100 of the cost, then you would pay the remaining $100. Since the dentist originally charged $600, you saved $500 by having insurance ($400 because of the dentist is in network with the PPO and has lower agreed upon rates and $100 because the insurance covered 50%). When you find out the maximum allowable amounts from the insurance provider, you can also ask what percentage of the service is covered by insurance and what percentage you will have to pay out of pocket.
- Amount billed D6104, Bone Graft: $600
- Maximum allowable amount: $200
- Covered by insurance (50%): $100
- Amount you owe: $100
- Amount saved by being insured: $500
Prior Determination
If you understand the above process, then you will always be able to calculate your out-of-pocket expenses, but there is an easier way to accomplish this by requesting a prior determination. When you speak to your dentist and they determine what care you required, you can ask their insurance specialist to submit a prior determination to your insurance. When this is submitted, it will contain all the procedure codes and what the dentist is trying to bill for each. The insurance provider will then examine all the codes, determine if they are covered, as well as the maximum allowable amount, then provide you with the prior determination that outlines your responsibility (how much you will owe). Prior determinations are great, and I recommend trying to obtain them whenever time allows. They ensure that you are not overcharged and that the dentist bills you according to their original treatment plan. However, a prior determination will usually take about 2 weeks, so if you need care sooner than that, you can get the procedure codes and find out the costs for yourself.
Explanation of Benefits
Once you receive the service, the dentist will bill you and submit the insurance claim. Most dentists will bill you at the time of service, so when you check out, they will charge you the full amount. If you have a prior determination, they will charge the amount for which you are responsible, but if you do not have a prior authorization, they will charge you the amount they typically bill. That means you will overpay in the office and have to wait for the explanation of benefits (EOB) before your overpayment is refunded.
What is an explanation of benefits (EOB)?
The EOB is the final summary after the dentist files the insurance claim and the insurance pays the dentist. In the original example, if you simply went to the dentist without getting a prior authorization, then after the appointment, the dentist would submit the insurance claim and, in most cases, you would pay before leaving the office. The dentist would claim $600 and may also have you pay $600 before leaving. Once the insurance processes the claim, they provide you and the dentist with the EOB, which states the maximum allowable amount for each procedure code, as well as how much the insurance paid. For a bone graft billed at $600, they would indicate $200 is allowable and 50% was paid by the insurance. The portion that you are most interested in is “patient responsibility,” which is what you owe. In this case, you owe $100. The dentist would then have to refund the $500 overpayment you made the day of the appointment. Be sure to pay attention to the EOB because some dentist offices are not well organized and will not automatically refund your overpayment. In such cases, you will want to call and request the refund.
Conclusion
Your typical PPO dental insurance will cost about the same amount as your routine care (typically x-rays and two exams and cleanings per year). However, dental insurance’s value comes from the maximum allowable amount (or cap) that they place on each procedure preformed by in-network providers. Typically, this cap is less that half of what the dentist would charge a non-insured individual. From this amount the insurance then pays a portion, which will typically be close to 50%. When time allows, request a prior authorization so you know all your out-of-pocket costs up front. If you do not want to wait on the prior determination, then keep an eye out for the explanation of benefits and make sure you get a refund for any overpayment (or pay the balance due).
