How Dental Insurance Really Works
LLC or S Corp?
January 31, 2020
Small Employer Health Insurance Tax Credit
January 31, 2020How Dental Insurance Really Works
DENTAL FEE SCHEDULE - Example of what dental procedures cost in Philadelphia (varies by geographical region)
If you are an individual or sole proprietor, good dental insurance is almost impossible to find. You might find it, but if you sign up you’ll soon realize it’s not what you bargained for. With dental insurance, it’s common to see many dentists and even more specialists do NOT accept any insurance. They are covered at “out of network” benefit levels.
Wait you say… when you look at your insurance benefits, the in-network and out of network benefits look exactly the same! Both columns have the same 100%, 80%, and 50% showing for both in & out of network. The “catch” is how the insurance company reimburses dentists and “out of network” dentists.
Let’s imagine you are a dentist. Dental insurance company XYZ comes to you and asks you to be in the network. However, you must accept their reimbursement rates…and they’re terrible! You charge $1200 for a crown but insurance company XYZ wants you to do it for $800… or 66% of what your regular fee would be. So you say bugger off! This is why many dentists are “out of network”.
So let’s look at those out of network benefits again from the perspective of a consumer. The brochure from dental insurance company XYZ says it’ll cover crowns at 50% for both in and out of network. So let’s say you go get your crown from an out of network dentist. That dentist tells you it’ll be $1200 so you expect to pay $600 since the insurance will cover 50%. Surprise… you get a bill from the dentist for $850.
This happened because insurance company XYZ thinks a crown should cost $800 so they’ll pay 50% of $800, which is $400… minus the $50 deductible and the insurance only paid $350 so you’re left paying the remaining $850.
The term that you want to focus on is the “usual & customary” reimbursement rate that the dental insurance company uses for out of network providers. You want to find a dental insurance with a “usual & customary” reimbursement rate of 80% or higher, preferably 90%. So if a crown costs $1200, the dental insurance company will recognize that and set the out of network reimbursement rate accordingly. Dental insurance with a high "usual & customary" reimbursement rate will make it seem like every dentist is in-network… even when they are out of network.
If you are an individual or sole proprietor, good dental insurance is almost impossible to find. You might find it, but if you sign up you’ll soon realize it’s not what you bargained for. With dental insurance, it’s common to see many dentists and even more specialists do NOT accept any insurance. They are covered at “out of network” benefit levels.
Wait you say… when you look at your insurance benefits, the in-network and out of network benefits look exactly the same! Both columns have the same 100%, 80%, and 50% showing for both in & out of network. The “catch” is how the insurance company reimburses dentists and “out of network” dentists.
Let’s imagine you are a dentist. Dental insurance company XYZ comes to you and asks you to be in the network. However, you must accept their reimbursement rates…and they’re terrible! You charge $1200 for a crown but insurance company XYZ wants you to do it for $800… or 66% of what your regular fee would be. So you say bugger off! This is why many dentists are “out of network”.
So let’s look at those out of network benefits again from the perspective of a consumer. The brochure from dental insurance company XYZ says it’ll cover crowns at 50% for both in and out of network. So let’s say you go get your crown from an out of network dentist. That dentist tells you it’ll be $1200 so you expect to pay $600 since the insurance will cover 50%. Surprise… you get a bill from the dentist for $850.
This happened because insurance company XYZ thinks a crown should cost $800 so they’ll pay 50% of $800, which is $400… minus the $50 deductible and the insurance only paid $350 so you’re left paying the remaining $850.
The term that you want to focus on is the “usual & customary” reimbursement rate that the dental insurance company uses for out of network providers. You want to find a dental insurance with a “usual & customary” reimbursement rate of 80% or higher, preferably 90%. So if a crown costs $1200, the dental insurance company will recognize that and set the out of network reimbursement rate accordingly. Dental insurance with a high "usual & customary" reimbursement rate will make it seem like every dentist is in-network… even when they are out of network.
