Week 17: A Dental Insurance Tutorial

In this short overview, we’ll cover the basics of dental insurance so you can confidently explain this important benefit to employees and answer most of the questions they’re likely to ask.

Dental insurance is a key part of an employee benefits package because it is extremely popular with employees. In fact, employees often value dental coverage nearly as much as health insurance — yet it is significantly less expensive. That makes dental insurance one of the best returns on investment for an employer’s benefits dollar.

Employees and their families benefit from dental insurance for several reasons. One major reason is utilization: people with dental coverage are much more likely to visit the dentist regularly. They are more likely to receive annual or semiannual cleanings and routine checkups compared to those without dental insurance.

There is also a strong connection between oral health and overall health, often referred to as the medical–dental connection. Many medical conditions can be detected during a dental exam, and poor dental maintenance can contribute to a range of medical issues. For this reason, dental care is an important preventive health benefit.

To understand dental insurance, it’s important to know what differentiates one plan from another. Most dental plans fall into one of two categories.

Dental Maintenance Organizations (DMOs)

A DMO — sometimes thought of as a dental HMO — is a plan where services are paid based on a fee schedule. Members know in advance how much will be paid for each service and are responsible for the remaining amount.

DMOs typically have smaller provider networks. Members must receive care from in-network dentists and often must select a primary dentist. Referrals may be required to see specialists.

DMOs are generally inexpensive, but they are less flexible.

Passive PPO Dental Plans

The more common and more popular type of dental plan is the passive PPO.

With a passive PPO, the insurance company pays a percentage of covered services up to an annual maximum. Members can receive care both in and out of network, allowing them to keep their current dentist even if that dentist is not part of the network.

After the calendar-year deductible is met — which is usually quite low — the plan pays a percentage of covered expenses based on the category of service. This is known as coinsurance.

The three most common categories are:

• Preventive care – often covered at 100%

• Basic services – typically covered at 80% (member pays 20%)

• Major services – often split 50/50 between the plan and the member

While other coinsurance structures exist, this is by far the most common arrangement.

The plan pays its portion of covered services until the annual maximum is reached. Annual maximums are commonly in the $1,000 to $3,000 range, although some plans offer higher limits — and a few have no maximum at all.

Plans can differ based on:

• Annual deductible

• Coinsurance percentages for preventive, basic, and major services

• Annual maximum benefit

A common plan design might include a $50 individual deductible, a family deductible cap, 100/80/50 coinsurance for preventive, basic, and major services, and an annual maximum of $1,000, $1,500, or $2,000. However, these details can vary.

Once you understand the basics, there are several important questions to ask when evaluating or selling dental plans.

How Are Periodontics and Endodontics Covered?

Periodontics and endodontics can be covered as either basic or major services. This matters because these treatments — such as gum disease treatment or root canals — are often expensive.

If covered as basic services, the plan may pay 80%, leaving the member responsible for only 20%. If covered as major services, the plan may pay only 50%.

With lower annual maximums (such as $1,000 or $1,500), members needing perio or endo services are likely to hit the maximum regardless. In those cases, classifying these services as major can help keep premiums lower.

With higher annual maximums, members are less likely to hit the cap, and covering perio and endo as basic services may reduce out-of-pocket costs.

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Do Preventive Services Count Toward the Annual Maximum?

In most plans, even though preventive care may be covered at 100%, the amount paid by the insurance company still counts toward the annual maximum.

Some plans do not count preventive care toward the maximum, and others may offer a rider that waives this limitation. This can help the annual benefit go further.

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Does the Network Discount Continue After the Annual Max Is Met?

Another important question is whether members still receive the in-network discounted rates after the annual maximum has been reached. This can be a valuable feature if the dentist participates in the network.

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How Are Out-of-Network Benefits Paid?

This is one of the most important — and most misunderstood — aspects of dental insurance.

Unlike health insurance, dental plans typically use:

• The same deductible for in-network and out-of-network care

• The same coinsurance percentages regardless of network status

The difference lies in how the allowed amount is calculated.

Maximum Allowable Fee (MAF or MAC)

Under this method, the plan pays based on the in-network fee schedule, even if the dentist is out of network. Because the dentist is not contracted, balance billing is more likely.

You may hear this referred to as MAF (Maximum Allowable Fee) or MAC (Maximum Allowable Charge).

Reasonable and Customary (R&C or U&C)

With reasonable and customary reimbursement, the plan pays a percentage of what dentists in the area typically charge. This amount is often set at 80%–90%, meaning eight or nine out of ten dentists would accept the plan’s payment as full reimbursement.

As a result, balance billing is less likely.

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Waiting Periods and Late Entrants

Another key consideration is whether there is a waiting period for major services.

Some plans impose waiting periods, while others waive them if the group or member had prior dental coverage. Prior coverage may offset a 12-month waiting period for major services.

In some cases, waiting periods apply only to small groups, while larger groups are exempt. Late entrants — employees who enroll after initial eligibility — may also face waiting periods.

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Orthodontic Coverage

When evaluating orthodontic benefits, important questions include:

• Does the plan cover orthodontics for children?

• Does it cover orthodontics for adults?

• Is there a waiting period?

• Is the limit annual or lifetime?

Most orthodontic benefits have a lifetime maximum, not an annual one. If a member uses orthodontic benefits under one plan and later switches carriers, any amounts already paid typically carry over and reduce the available benefit under the new plan.

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Employer Contributions and Participation Requirements

Dental plans may be:

• Employer-paid

• Contributory

• Voluntary

Employer-paid and contributory plans usually come with higher participation requirements. Voluntary plans tend to have lower participation requirements but slightly higher premiums.

That covers the basics of dental insurance. Understanding these details will help you explain dental plans clearly, set expectations appropriately, and guide clients toward the best fit for their workforce.

Thanks for watching — and good luck selling dental insurance.