Understanding Dental Insurance

According to the National Association of Dental Plans, 64 percent of the U.S. population has dental benefits. Of the 205 million people with dental benefits, roughly 155 million have some form of commercial insurance, while 50 million get coverage through a public program such as Medicaid, the Children’s Health Insurance Program (CHIP) or TriCare.

As a new dentist, it will be important for you to understand the different types of insurance so you can develop a treatment plan that is best for your patient. Below is a description of the various types of insurance for each model.

Commercial Models

Dental Preferred Provider Organization (DPPO or PPO): 82 percent of today’s dental policies are PPOs. In this model, the insurer creates a network of providers for patients to choose from. Dentists in the network get more patients, but take a discount from their normal fees. Patients are free to see dentists outside the network, but usually at higher out-of-pocket costs. PPOs typically cover all in-network preventative care, but have co-payments for restorative work. For example, the PPO might only pay 70 percent of the cost of the patient’s filling.

Dental Health Maintenance Organization (DHMO of HMO): 8 percent of today’s dental policies are HMOs. These plans utilize a network of providers, and patients are typically required to pick a primary provider and stay in network to get the full benefit of their plan. Dentists are paid based on the number of patients on the HMO. This is often referred to a capitated payment model.

Dental Indemnity Insurance: 6 percent of today’s dental policies are indemnity plans. This is a traditional dental insurance which, in the past, had significant market share. With indemnity, there are no provider networks and the dentist gets paid his or her usual fees. Indemnity insurance has shrunk in popularity because the plans are more expensive than a PPO and HMO. These plans have deductibles and co-payments similar to PPOs.

Discount Dental Plans: 4 percent of dental benefits are discount plans. Discount Dental Plans are not insurance but rather plans where dentists agree to see enrollees at discounted fees. The patient pays the dentist the discount plan fees directly.

Government Models

Medicaid and CHIP:
All states cover dental for Medicaid and CHIP children under the age of 21, while adult dental benefits vary widely by state. Medicaid and CHIP are typically managed together by the state and use two basic models:

  • Fee-for-Service: The state either directly or through a third-party administrator pays dentists based on a set fee schedule. Dentists must be credentialed with Medicaid to be in the provider network.
  • Managed Care: Each state contracts with managed care companies, which handle the administration of the dental benefit. They are typically fee-for-service, but sometimes pay dentists on a negotiated fee schedule versus a state fee schedule. Dentists must be credentialed into the managed care provider network.

Tricare: This program, which is for those actively serving in the U.S. military and their families, looks and feels just like a commercial PPO. Beginning mid-2017, all of these benefits will be administered by United Concordia.

This content was developed in cooperation with Kool Smiles.