Dental indemnity insurance is the traditional fee-for-service insurance plan. Basically, the insured person pays the dental provider directly and submits a claim form to the insurance company for reimbursement. They are reimbursed according to the agreement made with their insurance provider, and this can vary drastically from insurance plan to insurance plan. If the fee charged by the provider is greater than the reimbursement paid by the insurance company, then the consumer is expected to pay this difference. These traditional dental insurance plans allow consumers to choose any provider they wish, yet they usually have higher premiums than the other dental benefit options. Dental indemnity insurance is typically used to insure groups. Some of the leading providers of dental indemnity insurance include Aetna, Cigna and Prudential among others.
Dental indemnity insurance plans usually reimburse insured consumers by using one of two methods: Usual, Customary, and Reasonable (UCR) fees or table of allowances fees.15 For UCR plans, the insurance company assigns a UCR fee that they are willing to pay for each dental procedure. The insurance company pays this UCR fee or the dentist’s fee, whichever is less. The consumer pays the difference if their provider charges any amount greater than the UCR. This method implies that if consumers pay more than the insurance company’s UCR than they are being over-charged by their dental care provider.15 Supposedly, the UCR is the average fee charged by dental care providers for that particular service.15 In reality, there are no regulations in place to control what an insurance company deems as “Usual, Customary, and Reasonable,”15 so these fees tend to vary greatly from insurance company to insurance company and are often less than what most dentists would normally charge.
Dental insurance policies using the table of allowance provide consumers with a list detailing the amount covered for the corresponding dental procedures. Unfortunately, the fee that the insurance company is willing to pay is usually less than the amount charged by the typical dental practitioner.
Dental indemnity insurance is losing ground to some of the other, more popular dental benefit options. The latest market research conducted by NADP, The State of the Dental Benefits Market, 2005, indicates that dental indemnity insurance had 25% of the market share for dental benefits in 2005.16 This report states that dental indemnity insurance is decreasing in popularity.16 These insurance plans feature some the highest premiums of any dental insurance product, possibly leading to their decline in market share.16
According to the 2005 NADP report, the average monthly premium for a dental indemnity insurance plan is nearly $31, compared to nearly $16 for dental HMO insurance and nearly $24 for dental PPO insurance.16 Discount dental plans can be paid annually and the most affordable plans average out to less than $6 a month per individual and less than $9 a month per family.17
Dental indemnity insurance provides consumers with freedom of choice when selecting a dental provider, one of the most notable advantages of this insurance model. Insured individuals can change providers at will and do not need referrals to consult specialists. Unfortunately, the insured consumer pays for this freedom. The cost of premiums and annual deductibles for dental indemnity insurance is typically much higher than other dental benefit options. The time-consuming claims process associated with these insurance plans is another drawback. Additionally, since dental indemnity insurance is usually used to insure groups, finding and joining an individual dental indemnity plan can become difficult and expensive.
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Discount Dental Plans, Alternatives to Dental Insurance.
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