Companion Life Insurance Company
P.O. Box 100102, Columbia, SC 29202-3102
This article describes features, terms, and concepts to help you better understand how different types of dental insurance plans work. Keep in mind that dental insurance plan administrators may use different terms to describe the features described below.
Dental disease is inevitable without regular dental visits and good oral hygiene. What's more, the effects of dental disease are irreversible. For example, once you receive initial treatment to stop the progress of periodontal disease, it will re-emerge if you don't continue ongoing periodontal maintenance treatment and remain vigilant with your at-home care.
Because preventive care is so important, dental insurance plan designs aim to encourage personal responsibility. Most dental insurance plans reimburse a significant portion (or all) of the costs for preventive care, diagnostic services, and initial treatment of dental disease. What the insurance plan pays for avoidable or elective treatments is typically lower. This approach may keep insurance plan premiums affordable while providing clear financial incentives for members to be proactive and take greater ownership of their oral health.
Dental insurance plan designs can vary in several ways, including:
Let's review these items.
Indemnity and PPO insurance plans typically categorize services based on their purpose. These categories are referred to by a numeric "class," "unit," or alphabetic "type."
Plans vary in what they cover and how they categorize services, so it is important to review your benefit plan documents to understand the coverage levels of services you expect to receive.
| Service Category | Category Title | Purpose of Service | Example Services |
|---|---|---|---|
| Class/Unit I/Type A | Preventive and diagnostic services | Services typically received during a routine visit to help prevent dental disease or identify problems before they worsen. | Dental exams, X-ray images, tooth cleanings, fluoride treatments, and sealants |
| Class/Unit II/Type B | Minor/Basic restorative procedures | Services that stop the progression of dental disease, treat the effects of dental disease, or restore your teeth to a properly functioning state. | Fillings, periodontal scaling and root planing, periodontal maintenance, and simple tooth extractions |
| Class/Unit III/Type C | Major restorative procedures | More expensive services to repair or replace severely damaged teeth and gums. | Root canals, crowns, bridges, dentures, implants, periodontal surgery, and complex tooth extractions* |
| Class/Unit IV/Type D | Orthodontics | Services related to a course of treatment for orthodontics. | Tooth straightening, bite corrections, appliances, and braces |
* Endodontic and periodontal treatment often fall under Class/Unit III/Type C Major. However, some dental insurance plans consider these treatments as Class/Unit II/Type B Minor/Basic services.
Indemnity and PPO insurance plans typically calculate benefits based on a percentage called coinsurance. Coinsurance represents the portion of dental charges that the plan and the member will pay after a member has met any required deductible. For example, if the plan coinsurance for a procedure is 80%, then the patient coinsurance is the remaining 20% of the allowable amount, plus any additional charges up to the dentist's full fee if that dentist is an out-of-network dentist (this is explained in more detail in the out-of-network benefits section below). Most benefit communications will represent the plan coinsurance and not the patient coinsurance.
Plan coinsurance is typically higher for Class/Unit I/Type A services, lower for Class/Unit II/Type B services, and lowest for Class/Unit III/Type C and Class/Unit IV/Type D services. As described earlier, this approach aims to provide clear financial incentives for members to be proactive and take greater ownership of their oral health.
In-network dentists agree to accept negotiated fees as payment-in-full for the treatment they provide. Those fees are typically considered to be the basis for plan payment or the plan's "allowable amount." The plan coinsurance is applied to this allowable amount to determine what the plan will pay. You are responsible for the difference.
For example, if the negotiated network fee for a filling is $150, then the plan's allowable amount is typically $150. If the plan coinsurance for your filling is 80%, then $120 is paid by the plan, and you are responsible for the remaining 20%, or $30. The in-network dentist shouldn't charge you anything more. In-network dentists agree not to charge members for costs above those reduced treatment fees. If they do, this is called "balance billing" and is prohibited.
The chart below shows how claims are paid when you visit an in-network dentist. Actual charges vary widely based on the type of dental plan and the geographic location where the service is provided.
| In-network Dentist | |
|---|---|
| Dentist's usual charge for a filling | $180 |
| Negotiated network fee | $150 |
| In-network discount | $30 |
| Allowable amount (What the plan bases their reimbursement upon) | $150 |
| Plan coinsurance (Class/Unit II/Type B service) | 80% |
| Covered plan coinsurance amount (what the plan pays) | $120 |
| Your total cost* (your out-of-pocket expense) | $30 |
* This example assumes that any annual dental plan deductible has been met.
Dental insurance plan administrators don't always base the plan coinsurance amount on an out-of-network dentist's normal charges. If an insurance plan administrator based their reimbursement on an excessively high charge, it would lead to higher claim costs and lead to higher premiums for all plan members.
To keep premiums affordable for everyone, dental insurance plan administrators must limit the basis for what the plan will pay to the plan's "allowable amount." To do this, dental insurance plan administrators often use a method that some plans refer to as a Reasonable and Customary (R&C) charge. Other dental insurance plan administrators describe a similar method using the terms "Usual and Customary," "Usual, Customary and Reasonable (UCR)," or others. Using this method, a dental plan's out-of-network allowable amount is the dentist's charge unless that charge is high compared to other dentists. A charge is considered high when it exceeds a designated percentile of all charges in a given community, ranked from lowest to highest.
The chart below shows how claims are paid when you visit an out-of-network dentist. Actual charges vary widely based on the type of dental plan and the geographic location where the service is provided.
| Out-of-network Dentist | |
|---|---|
| Dentist's usual charge for a filling | $200 |
| In-network discount | N/A |
| 90th percentile of charges in the community (allowable amount) | $180 |
| Plan coinsurance (Class/Unit II/Type B service) | 80% |
| Covered plan coinsurance amount (what the plan pays) | $144 |
| Your portion of the allowable amount | $36 |
| Your additional cost for the difference between your portion of the allowable amount and the dentist's usual charge | $20 |
| Your total cost* (your out-of-pocket expense) | $56 |
* This example assumes that any annual dental plan deductible has been met.
Dental Health Maintenance Organizations (DHMO) generally require you to select a primary dentist from their network. You will need to receive care from this dentist to be eligible for benefits. In return, these DHMO plans pay these dentists a monthly fee called capitation. When you require care from a specialist such as a periodontist, endodontist, pediatric dentist, or oral surgeon, you must obtain an authorization from your primary dentist.
Some DHMOs may not require you to select a primary dentist or obtain an authorization for care from a specialist. These plans are called open-access plans.
DHMO networks tend to be much smaller than PPO networks but coverage is often less expensive than a PPO or indemnity plan. Plus, coverage levels may be stronger. Many DHMOs do not have annual maximums, although co-payments, deductibles, limitations, and exclusions may still apply. Review your open enrollment materials and benefit plan summary carefully to clearly understand the plan benefits and your obligations. Similar to PPO plans, dentists who participate in a DHMO undergo a review process known as credentialing.
DHMO benefits for treatment provided by an out-of-network dentist are generally limited to emergency care only.
Most indemnity and PPO plans require you to pay a fixed amount before the plan benefits are paid. This fixed amount is called a deductible and it exists to encourage members to take greater responsibility for their healthcare. Dental plans often do not require a deductible for preventive and diagnostic services (Class/Unit I/Type A). This is designed to encourage regular dental visits. Deductibles for Class/Unit II/Type B and Class/Unit III/Type C services vary by plan.
Often, there is a deductible for each covered family member. In some cases, one family deductible applies to all covered family members. Your open enrollment materials and benefit plan summary will clearly outline the plan deductibles and the services to which the deductible applies.
Deductibles reset at the beginning of each plan year or calendar year.
Dental insurance plans typically limit reimbursement for certain services. For example, dental insurance plans often limit exam and cleaning coverage to twice per year or crown replacement coverage to once per five or ten years. Other services, such as sealants, may only be covered for children up to a certain age (for example, age 19) or at a specified frequency (for example, once every five years).
There are many plan limitations, so review your open enrollment materials and benefit plan summary carefully to avoid surprises that may result in higher costs.
Dental insurance plans exclude certain services. Exclusions may include such things as cosmetic services, a treatment that is considered to be a medical plan expense, or services that are temporary or experimental.
Dental insurance plans contain other exclusions as well, so review your open enrollment materials and benefit plan summary carefully to ensure you understand whether the services you are considering will be covered under your plan.
There are other plan elements that may affect how dental benefits are determined. It's important to review your plan documents and understand how your plan handles certain situations. If you have any questions, you should talk with your HR or benefits department. Some circumstances to consider include:
Companion Life Insurance Company
P.O. Box 100102, Columbia, SC 29202-3102