Cagey Consumer

Consumer Alert: Dental Insurance that Doesn't Pay

Normally when you buy insurance, you expect that the premium you pay goes toward covering the cost of your claims. Unless you have an employer or other party to pay a portion of your premium, you also must realize that your premiums are usually expected to exceed the amount that the insurance company pays out, but that the insurance company exposes themselves to the risk that they will actually have to pay more out than the premiums you have paid.

For some dental plans, however, the insurance company doesn't take this risk. It knows in advance that the premiums charged will exceed the claims paid. It knows this because, under certain dental plans, the insurance company never pays any claims!

Who pays for the free cleanings?

Typically, these plans include two free cleanings a year. Because the annual premium for these plans is likely to be about the same as what two cleanings would cost, it seems like a "can't lose" deal for the subscriber.

But if the subscriber isn't paying for the cleaning and the insurance company never pays any claims, how does the dentist get compensated? The dentist gets compensated by having you walk into his office.

Dentists accept schedule of fees

The insurance company attempts to locate dentists who will agree to accept the fees specified on their fee schedule, which includes the two "free checkups" a year. Dentists are often willing to do these free checkups for the same reason that Sears or K-Mart will do a free "safety checkup" on your car: the odds are good that they can find some work that needs to be done, which will pay for their time and trouble to do the checkup and much more.

What's wrong with these plans?

This is an example of the "no free lunch" theory of economics (as in "there ain't no such thing as a free lunch"). As an individual, you may be better off with such a plan than without one. Then again, maybe not. Here are the problems that Cagey Consumer has with these plans:

What You Can Do?

Dental insurance generally is good public policy because people are likely to benefit from the preventive dentistry that these plans encourage. Unless you're wealthy enough to be "self-insured", your best option is to get "real" dental insurance that actually pays on claims. But if that option is not available to you, here are some possible alternatives:

While you may consider these approaches unconventional, there's no evidence to suggest that they won't work. In any case, you will be sending a message to the dentist that you are aware of his need to be compensated, but he needs to be aware of your need to limit your costs as well.

Related links:
A Guide to Dental Insurance Benefits (ADA)
Dental Insurance and Dental Assistance Plans (Donald Tabor, DDS)
Dental HMO's are Fraud (Donald Tabor, DDS)
explanation of 3rd party payments (Corbin Kinser, DDS)
Dental-Related Internet Information List of Links

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