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Plans and Products

Basic Dental Plan Types

Indemnity  |  HMOs  |  PPOs  |  Discount  |  Direct Reimbursement

Indemnity plans
These are the traditional fee-for-service insurance plans. You pay a monthly premium to an insurance company and in return it covers a portion of your dental expenses. Some typical features of these plans:

• High deductibles before coverage begins (well-designed plans don't apply the deductible to preventive services)
• Probationary periods on certain procedures that last up to a year
• Annual dollar limit on benefits
• Chose your own dentist
• Your average monthly cost: $19 to $25
• Companies selling these plans are regulated by state insurance departments.

In general, an indemnity plan will pay 100 percent of the costs for preventive services, 80 percent for common restorative services, and 50 percent for major treatments, such as crowns and orthodontics.

The most significant problem you'll find when shopping for dental indemnity is that these plans are rarely offered because it's difficult for companies to make money on them.

Dental HMOs
These insurance plans, also known as "capitation plans," operate like their medical HMO cousins. Some typical features of these plans:

• Monthly premiums (some require you to prepay a year's worth)
• Co-payments for office visits
• Free preventive or routine care
• You must select from an approved network of dentists
• May have an initial enrollment fee
• Annual dollar cap
• Your average monthly cost: $6 to $15
• Companies selling these plans are regulated by state insurance departments.

Unfortunately, as with indemnity plans, you'll be hard-pressed to find dental HMOs being sold to individuals.

And be careful of possible confusion in terminology. These plans are generically known as "DHMOs." But because they are regulated differently by each state, companies may actually be licensed under a different name. In Maryland, for instance, a DHMO may be called a "dental plan organization." And in Virginia, such companies are known as "limited health services health maintenance organizations" and have their own set of operating rules.

Preferred provider organizations
Another true insurance plan, a PPO falls somewhere between an indemnity plan and a dental HMO. A group of dentists agrees to provide services at a deeply discounted rate, giving you substantial savings -- as long as you stay in their network. Unlike the more restrictive DHMO, though, you can go out of network and still receive some benefits. Some typical features of these plans:

• Monthly premiums
• Annual dollar cap
• You must stay within the approved network of dentists or pay higher deductibles and co-payments
• Your average monthly cost: $20
• Companies selling these plans are regulated by state insurance departments.

These plans also are not widely available to individuals.

Discount dental plans
Discount dental plans are akin to "diner's clubs," in which you buy a book of coupons and get a percentage off your meals at participating restaurants. With a dental plan, you don't actually get coupons, but you must go to a dentist who has agreed to participate in the plan and offer services at a discounted rate -- $650 for a crown instead of the standard rate of $750, for instance.

These are the dental benefit plans most widely available to individuals.

Some typical features of these plans:

• Monthly fee to the dental-discount company
• You must stay within the plan network
• An initial enrollment fee
• Your average monthly cost: $5 to $10
• These plans are not regulated by insurance departments.

It's important to keep in mind that a discount dental plan (also known as a referral plan) is not the same thing as an insurance policy. Because discount plans aren't regulated by state insurance departments, they don't have to meet strict insurance regulations. That doesn't mean they aren't legitimate, but you should take precautions when buying a dental discount plan, especially over the Internet, where you have to provide a variety of confidential information.

And these discount plans are being increasingly sold over the Internet, often on sites as gaudy as a carnival midway.

InsuranceCompany.com founder David Blunt warns that it's buyer beware when shopping online for dental plans. His company, based in Long Beach, Calif., operates three other Web sites: insuranceco.com, dental4less.com, and dentalbenefit.com. It sells both dental discount plans and dental insurance. "You're giving out your Social Security number, date of birth, credit card number, everything," he notes. "There are crooks in every business."

Consumer Dental Care, a company run by dentist Steven Keller in Calverton, Md., also offers both discount dental plans and dental insurance plans. Keller himself has received e-mail pitches to buy discount plans on the Internet, but says that when he has requested a list of network dentists or a handbook detailing benefits, he has been told he has to buy the plan first. That's a good warning sign to stay away.

Here are some additional considerations when shopping for a dental discount plan:

• Don't rely on e-mail when buying a plan on the Internet. Get an address and phone number for the company. "If they haven't told you enough information, don't buy from them," Blunt warns If the company is slow about responding to e-mail, or doesn't respond at all, go elsewhere

• Beware of plans that are matched with other discount plans to entice you to buy more than you really need, like getting a coupon for two boxes of cereal when all you need is one

• Make sure the plan is available in your state

• If you have a complaint about your discount plan, you can't go to insurance regulators. You have to work it out with the dentist's office or the state dental board

• Make sure your dentist has actually agreed to participate in the plan

• Deceitful companies will include dentists on the discount list even if they haven't accepted the lower fees. Call ahead

• Check around to see if the "discounted" fee you are getting is really discounted. Contact several dentists' offices and compare discounted and nondiscounted fees for the same procedures

• Don't send bank account information over the Internet.

Direct reimbursement plans
A dental care plan now coming into vogue is the direct reimbursement plan. This is a self-funded benefit plan -- not insurance -- in which an employer pays for dental care with its own funds, rather than paying premiums to an insurance company or third-party administrator. You, the patient, pay the full amount directly to the dentist, then get a receipt detailing services rendered and the cost, which you show to your employer. The employer reimburses you for part or all of the dental costs, depending on your specific benefits.

Your company might reimburse 100 percent of your first $100 of dental expenses and then 80 percent of the next $500, and 50 percent of the next $2,000, with a total annual maximum benefit of $1,500. Or it might reimburse only 50 percent of your first $1,000, resulting in a $500 yearly cap.
Some typical features of a direct reimbursement plan:

Some typical features of a direct reimbursement plan:

• Neither you nor your employer pay monthly premiums
• Freedom to choose any dentist
• Typical employer cost: depends on the number of employees and
• benefit caps
• Benefits usually capped at $500 to $1,500 annually.

The American Dental Association (ADA) is aggressively marketing this type of dental plan. The ADA contends it keeps corporate costs as much as 40 percent lower than standard plans because it pays only for employees who actually use the service, unlike HMOs, where premiums cover everyone, regardless of whether they visit the dentist. About 2,500 U.S. companies have such plans now, says Thomas Killam, manager of the ADA's council on dental benefit programs. Another 300 are adopting direct reimbursement each year.

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