Personal Finance PowerPoint presentation, Dental Insurance Overview. Prepare to get financially fit by practicing personal finance. Remember that insurance is part of our long-term risk management strategy, where we use the adage of measure twice, cut once, putting a formal plan in place, such as setting our goals, developing a plan to reach them, putting the goals in action, reviewing the results, repeating the process periodically. We're now looking at dental insurance. Most of this information can be found at Investopedia. How does dental insurance work, which you can find online. Take a look at the references, resources, continue your research from there. This is by Justin Walton, updated March 9th, 2022. In prior presentations, we've been looking at insurance in general, then moving on to medical insurance, noting that the medical insurance can be more complicated than other types of insurances due to the fact that the medical industry is complex in and of itself and the laws and regulations involved in the medical industry, as well as the medical insurance. We're now gonna move on to the dental, which has some characteristics. It should be easier than the medical insurance, but has some characteristics of the medical insurance. Noting it's a little distinct from the classical notion of insurance for something like property insurance in that when you're talking about property insurance, for example, you might be trying to insure against some possible future event that may be not likely to happen, but if were to happen, would have been financially devastating, therefore you buy the insurance to safeguard against the risk of that possibility happen. The medical insurance lines up to that with some degree because you have these caps in terms of how much you'd be paying, say, out of pocket, for example, and in that sense, you would be basically insuring against that big sickness that could happen if you get really sick and that medical bills just skyrocket. It would be nice to have some point in time where the insurance basically kicks in. That would be the classical use of the insurance. However, we also see that insurance has been expanded and trying to be used to do the more maintenance kind of stuff, the day-to-day or the more routine type of doctor visits and cover more of that stuff, which kind of complicates the insurance picture greatly with the insurance and we get these other terms that we might not use as much with other kinds of insurance because we always have the deductible, but we might have the copays and the out-of-pocket maximums and so on. The dental insurance can be, of course, easier to some degree than the medical insurance, but there's still some complexity in that there could be some overlap between something that's medical and dental. And then we also think about the dental in a similar fashion that we might think about the dental insurance as something that's gonna help us to basically pay for the dental kind of maintenance type of stuff and possibly not using it so much as the classical type of insurance that would be used, which is to ensure against some big event that might happen that could be financially devastating. So we still have that kind of complexity when you compare it to other types of insurance. Okay, so how does dental insurance work? Dental insurance policies help many people effectively budget for the cost of maintaining a great file compared to medical insurance, understanding dental insurance policies is a breeze. So clearly the medical insurance has a lot of different laws and regulations related to it. And when you try to categorize all the different procedures that are involved in the medical field, it's just, there's an infinite number of things that could go on that you can't really just list them all out. When you get down to the more, just simply the dental work, you could get to a fairly routine number of dental kind of procedures and kind of list them out a lot more easily than just simply the entire medical field. So that can make it a little bit easier for us to try to categorize everything when we do this insurance stuff. So most policies are straightforward and specific, which regarding which procedures are covered and exactly how much you have to pay out of pocket. So again, that's a lot easier to do when you try to put these insurance policies and say, hey, this is how much you're gonna have to pay for this, that and the other thing. Well, if you know exactly what's happening, which in the dental field is a lot more likely than in the medical field, when oftentimes you're like, I don't know what's happening, that's the problem, I'm having a problem, but I need a specialist that's gonna try to figure it out. Well, that's in a gray area that gets confusing. The dental field can categorize oftentimes a lot more precisely. Dental insurance is available as part of medical insurance plans or as a standalone policy. So when you're thinking about dental insurance, whether you're buying it from your work or somewhere else, you're gonna think about, okay, is it connected to my insurance? Do I have dental coverage with that as well? Do I have to buy it as a separate policy? Do I need it? So overview of the system. First, here's a breakdown of how private dental insurance works. You select a plan based on the provider dentists you want to be able to choose from and what you can afford to pay. So you might start with the actual dentist. If you actually have a dentist, then oftentimes people like to stick out with the dentist. So you might be thinking, okay, if I don't have access to medical insurance, is there a medical insurance or dental insurance that I could get that would cover the current dentist that I'm working with, that might be one approach that you would be using to get the medical insurance, talk to your current dentist if you have one. If you already have a dentist you like and they are in the insurance company's network, you'll be able to opt for one of the less expensive plans. So you got the same kind of network scenario that we saw with the medical insurance, different kinds of insurance that might have different networks and the dentist working with the networks. If you're in network, then you lower the premiums or lower the cost if you go to that individual or that dentist if they're in the network. So if you don't have a dentist at all, you can choose from the dentists who are in the network and again have the option of a less expensive plan. So clearly if you don't have a dentist, you might be looking at different networks to purchase or different insurance and different networks that they cover to determine what plan you want to do or you might do it inversely, right? You might start to say, okay, I'm gonna go look for the dentists that are looking good in my particular area that I have referrals to and then you might try to build and take a step back and take a look at what the insurances would be covering that dentist or if you're getting the dental insurance and you're more restricted to the dental insurance such as you're getting it from your work or something like that, then of course you might get the insurance first and then be shopping around for the dentist that would be in the network of that insurance. If your existing dentist is not in the network, you can still get insurance but you'll pay significantly more to see your dentist than an in-network one, so much more that you may not have any chance of coming out ahead by being insured. So you could still be insured and be visiting a dentist outside the network but you'll be paying more and you might not be recouping the cost of the insurance to do so. Note as we're thinking about insurance in that way, we're thinking about the insurance a little bit differently than classical kind of insurance for like property insurance or life insurance or something like that where we're typically purchasing the insurance to insure against a low probability but high cost event that possibly could happen in the future like the home building down or you dying in a sudden type of way. We're hoping that doesn't happen but if it did, then it would be highly costly. That's what the insurance is covering. With the dental insurance, we're often thinking about it more as something that we're going to purchase to see if we can basically come out ahead in terms of our kind of more in the maintenance side of the dental bills and there's a little bit of a crossover in terms of well, what if you had a big kind of medical emergency with regards to dental work, if it was reconstructive work for example, as opposed to the dental kind of routine maintenance kind of thing. So that's where I think the dental insurance gets a little bit confusing in that it differs a bit from what you might think of as like the classical use of insurance to safeguard against a low probability, high cost event. So the monthly premiums will depend on the insurance company, your location and the plan you choose. For many people, the monthly premiums will be around $50 a month. This means that you're spending $600 on dental costs each year, even if you don't get any work done. So we're talking about how much you're gonna be paying even if you don't get the work done because of course you're paying the premiums for the dental insurance. Again, you might think of it, well, I'm paying the premiums for the dental insurance not simply to get the maintenance done and lower the yearly cost, but so that at least something will kick in possibly if I have more of a bigger bill in the dental area which you might try to self-insure to some degree with the way the dental policies work which we'll see a little bit more when we talk about like the out-of-pocket costs differing a little bit, different substantially from the medical insurance. So waiting period for dental insurance. Most dental insurance policies have waiting periods ranging from six to 12 months before any standard work can be done. Waiting periods for major work are typically longer and can be up to two years. So these periods are set in place by insurance companies who guarantee that they profit off a new account and to discourage people from applying for a new policy to cover impending procedures. So in other words, note, when you're thinking about insurance in general, you can't really buy, you shouldn't normally, you can't buy insurance say after you got in a car accident, you can't buy the car insurance. Or if you were able to note that you're gonna drive, I'm just about to drive the car off the cliff, you can't really buy the, you're not able to get the insurance right before the event that you know is gonna happen because the insurance is usually trying to safeguard an event that possibly could happen in the same for the property insurance on a home. You can't basically get insurance after the home burnt down. With the dental insurance, clearly if you already have procedures that are gonna be significant that need to be done immediately or something like that, they're causing pain, then the insurance company doesn't, that's like a pre-existing condition type of thing. So they're not gonna check everything out because that would be costly to see if there's a pre-existing condition, for example, but instead they put the waiting period in place, right? So they're gonna say, well, the policy is not gonna kick in for a significant, you're gonna have to be dealing with a lot of pain for quite some time. If you wanna wait out the waiting period, if you buy the insurance right before, you know, some kind of event would be happening. That's my interpretation of the thought process for a waiting period before the insurance kind of kicks in. Deductibles, co-pays and co-insurance. And insurance deductible is the minimum amount that must be paid before the insurance policy pays for anything. So we got these same kind of terms. The deductibles, when you're thinking about classic property insurance, you usually think the deductible is something and then the insurance kicks in over that. But remember with the medical, as well as the dental, you could have the deductible that you have to pay and then over that, you've got the, you might have to pay a percent after that point in time. So for example, if the deductible is $200 and the covered individual's procedure is $179, the insurance does not kick in and the individual pays the entire amount. Co-pays, which are a set dollar amount, may also be required at the time of the procedure. When a dental deductible is met, most policies only cover a percentage of the remaining costs. The remaining balance of the bill paid by the patient is called co-insurance. So in other words, at that point in time, you're gonna be paying some percentage of the bill. So which typically ranges 20% to 80% of the total bill. Costs and what procedures are required may also differ based on the patient's age. Seniors on Medicare, for instance, will have a different definition of what constitutes the best dental insurance possible than other age groups. So you would think that that would be expected because as we get older, you would think the dental necessities would be higher. How dental insurance categories and pays for procedures. Dental procedures covered by insurance policies are typically grouped into three categories of coverage. So we've got the preventative. Now, once again, we saw this in the medical kind of coverage. You're gonna try to put things into the categories and you can see how from a political standpoint, for example, there's gonna be incentives to try to get the preventative stuff done. The argument being that we want people to do the preventative stuff and that could lower long-term health costs by getting the preventative before things get bad and so on. So you've got the preventative, you've got the basic, and then you've got the major. So most dental plans cover 100% of preventative care such as annual or semi-annual office visits for cleaning x-rays and sealants, which is great for the dentist cause that's how they get you into the chair so that they tell you all the problems you have and then they start charging you for the non-preventative stuff. But in the case, basic procedures are treatments for gum disease, extractions, fillings and root canals with deductibles, co-pays and coinsurance determining the patient's out-of-pocket expenses. So obviously then, when you get into your pain for the procedures, you've got the deductibles and the co-pays and the coinsurance. So most policies cover 80% of these procedures with patients paying the remainder. Major procedures such as crowns, bridges, inlays and dentures are typically only covered by 50% with the patient paying more out-of-pocket expenses than other procedures. And obviously those four major procedures can be more costly and possibly more variant, but notice that most of these normal procedures that we think of as routine maintenance as we just grow old for the teeth, or if we take care, don't just from taking care of not taking care of the teeth, for example, they can be categorized a lot more easily than say the whole medical industry. So that means this whole categorization process to try to determine what the procedure falls into and how much you're gonna pay and what's the co-pay might be easier a lot of times for the dental in some cases than say the whole medical field. So every policy differs in terms of which procedures are categorized as preventative, basic and major, so it's important to understand what is covered when comparing policies. Some policies closely classify root canals as major procedures, while others treat them as basic procedures and cover much more of the costs. So obviously, if you put these categories together and have different coverage based on the categories, it's important to know which procedures and which category. So patients who may need costly or procedures should pay particular attention to the details of dental insurance policies. For instance, a single dental implement can cost $3,000 to $6,000. So when you get into the bigger kind of dental procedures, they can be quite expensive. And this is why, in my opinion, it would be nice because it's just like the medical bills. If you get certain procedures, you can see the dental bill kind of skyrocket. So you would think, you would like insurance to kind of safeguard against the event of you having some skyrocketing dental bill for some reason, but that's kind of not the way the dental insurance is set up. And we'll see that when we get to the maximums or the maximums of the insurance policies will basically pay on a yearly basis. So many basic dental insurance plans don't cover implements and those that do come with limits and exclusions. With that in mind, many consumers choose dental insurance that will cover implements. So dental insurance does not cover cosmetic procedures. And this is kind of problematic to some degree as well, of course, because in the United States, some of these cosmetic procedures are standard things these days. I mean, you're supposed to not have like yellow teeth these days, I guess, right? It's not fashionable. So teeth whitening is almost like routine, but obviously it's a cosmetic type of things. Same with like if you have, you know, some like a veneer type of thing or something that doesn't look good on your tooth or something like that, but you would think that would be fairly routine, but no, cosmetic, so therefore it's gonna be more costly. So most dental insurance policies do not cover costs of cosmetic procedures like teeth whitening, tooth shaping, veneers, and countering. And I think some of these things actually could be kind of preventative, possibly not like teeth whitening, but if you're shaping the tooth or something like that to not cause problems in the future, you would think that could be a preventative or if you have something that's like a divot in your tooth, but it's not an actual cavity, you would think that that might be something that would be preventative to some degree, although you would like it to look nice too. So it's kind of funny that some of these crossovers between cosmetic procedures and what's kind of routine might change over time, but we'll see it. Because these procedures are meant to simply improve the look of your teeth, they are not considered medically necessary and must be paid for entirely by the patient. Some policies covers braces, but those usually require paying for a special rider and or delaying braces for a lengthy waiting period.  I would think that that would be at least covered, possibly basic or even preventative, right? You would think to some degree, but no, that's not how it is. So yearly coverage maximums, though most medical insurance policies have yearly out-of-pocket maximums, the majority of dental policies cap the amount of annual coverage. Now this is the thing to me that is strange with the dental and coverage when you compare it to like classical insurance. Cause again, what you're trying to do, oftentimes when you're covering something like your house burning down, is you're trying to have a fairly high amount that the insurance company is gonna cover because that's what you can't get to, right? Where you're gonna say, I'm gonna have a deductible which I can cover. Then I want the insurance company to cover the rest up to a fairly high amount, basically to recover the home, right? So that would be nice for the replacement costs of the home or something like that. With the dental and with the medical care, you got a similar kind of thing. On the medical side, you've got the deductibles. You can go over the deductibles with the copays and the coinsurance and so on. But then you've got this thing called the out-of-pocket maximum where after that point in time, if you got some really expensive thing, then the insurance kind of kicks in. Where the dental doesn't really have that, except because they're gonna actually cap what would be paid out fairly at a fairly low level. You can imagine fairly modest dental procedures kind of going over the annual caps that are on many of the policies. So that's why the dental insurance, you might think of it more as, to some degree, something that you're gonna use to lower the normal maintenance costs by basically having it in that format and or to help you to self-insure against a big dental problem. But you need to keep in mind that it's gonna, that you've got this kind of reverse structure where the actual amount that's gonna be paid out by the company is capped at a fairly low amount compared to other kinds of insurance oftentimes. So coverage maximums typically range from $1,000 to $2,000 per year. Generally speaking, the higher the monthly premium, the higher the yearly maximum. So again, we saw that we saw a couple of procedures before they said we're like $3,000 for one kind of the procedures or something like that. So that's not the highest maximum. You can see clearer than that pretty easily. So when patients reach the yearly maximum, they must pay for 100% of any remaining dental procedures. Many insurance companies offer policies that roll over a portion of the unused annual maximum to the next year and that would be great because then if you can accumulate some of the unused maximum, then you can accumulate it up and use it more like a preventative or insurance policy guarding against some risk of a big dollar amount event or something, applying tax credits for dental insurance. Any leftover tax credit you don't use to pay for your family health insurance as purchased through the healthcare.gov may be applied to pediatric dental insurance premiums if your medical insurance policy does not include dental coverage. So you've got that kind of subsidy item that we talked about in the health insurance that could roll over for the pediatric portion here. So if your health insurance policy includes children's dental coverage, you cannot use tax credits to buy an additional plan. So can tax credits be applied to dental insurance? Yes and no. You may use tax credits for dental insurance if your plan doesn't include children's dental coverage. If the plan does include dental coverage, you may not use them to purchase an additional plan. Does dental coverage cover cosmetic treatments? No, cosmetic dentistry such as veneers or adult braces are not typically covered by insurance. Is there a limit to your dental benefits each year? Yes, most plans cap out at $1,000 to $2,000 a year for benefits when that limit is met. Patients pay 100% of their dental costs. Is my annual exam covered by dental insurance? Most plans cover routine procedures such as exams, tooth cleaning and x-rays at 100%. Can I use my dental insurance immediately? Most dental policies require a six to 12 month waiting period for any restoration work. Routine exams and cleaning should be covered immediately. So notice that's again, you can kind of see why they would want to do that because they're trying to delay, they're trying to not have to screen someone for preexisting conditions. This was my interpretation at least, but still try to prevent preexisting condition kind of situations by, you know, implementing that waiting period you would think would be the rationale. What is a deductible? A deductible is the minimum cost that must be paid by the patient before your dental work benefits kick in. In a plan that covered routine maintenance exams, your deductible would begin with any restoration work completed. After the deductible is met, your insurance should pay the established percentage of any further bills. So do I have to choose a dentist within my network? To use your dental benefits, you must use an in-network dentist. So typically you got that network situation set up again. Check to see if your current dentist is covered by your plan before signing up.