Dental Plans and Insurance Coverage

Most people obtain their dental insurance coverage through a plan sponsored by their employer.  But a wide variety of dental insurance plans are available to anyone whose employer doesn't offer coverage.

The principal purpose of dental insurance is to ensure that covered individuals get regular preventative care, as insurers realize that minor dental problems, if not detected and promptly treated, become expensive, major dental problems.  Each dental plan will differ in terms of the coverage provided and the amounts paid to providers, so it pays to read and understand your policy before you need to use it.

Levels of Care

Types of dental care are usually divided along several lines:

• Preventive procedures:  cleanings, exams and X-rays
• Basic Procedures:  fillings, tooth extractions chipped teeth, etc.
• Major Dental Care:  surgery, orthodontics, partials and dentures

Usually, as you move up the scale from preventive to basic to major care, the amount covered gets smaller.  Many plans cover 100% of the cost of preventive measures such as cleanings.  They will often pay 50-80% of the cost of basic procedures but only a small percentage of major dental work.

Almost all dental plans will require a small co-pay at the time of service (typically $10-$15).  Deductibles (an amount of money the patient pays out of pocket before coverage begins) are also common in dental plans, as are annual and lifetime coverage limits.  Read your policy carefully to understand how much you will have to pay for a given type of dental care.

Three Basic Types of Plans

There are three basic types of dental plans commonly available – traditional indemnity, Preferred Provider Organizations (PPOs) and  Health Maintenance Organizations (HMOs).

The traditional indemnity plan allows you to go to any provider.  It will generally pay 100% of preventive care and a smaller percentage of the UCR (usual, customary and reasonable) charges for basic work.  This type of coverage is popular, so the costs are higher and it is often harder to get appointments.  Also, traditional indemnity plans normally will not cover pre-existing dental conditions.

A PPO is a network of dental providers that has been assembled.   If a network provider is not used, the cost to you will be higher. 

With most HMOs you pay a flat rate and are entitled to whatever services the provider offers with no additional charges.  If you don't use any services, you lose the money.  Similarly, the HMO pays its providers a flat fee per person (capitation) regardless of the amount of services actually provided to members.

Tax Considerations

Dental insurance premiums may be tax deductible.

While you cannot deduct the cost of premiums paid by your employer, you can deduct any premiums you paid, if you paid them with after-tax dollars.  To determine the extent if the deduction, calculate all non-reimbursed dental expenses (premiums, co-pays, deductibles, medicines, etc.) and transfer that number to your Form 1040 Schedule A.  To the extent that total exceeds 7.5% of your adjusted gross income, you can take a deduction.

If you are self-employed and your business shows a profit, you can deduct dental expenses, including premiums, using Schedule C.

If you want more information about dental insurance, you can consult with an independent benefits specialist or with an insurance agency or broker that represents dental insurers.