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Comparing orthodontic insurance with discount dental plans
by Tony Novak, CPA, MBA, MT
, revised 11/18/2011
Small businesses that need dental coverage for the owner or employees may find more value in provider discount plans than dental insurance plans.
One clear example is the coverage provided for orthodontic expenses. The discount plans provide more coverage, provide it sooner, and provide it at a much lower cost than dental insurance plans. Consider the typical scenario where a family has a dependent child who needs orthodontic care. A dental discount plan will cut the total annual cost, on average, from about $2500 to about $1200. The total cost of the discount plan is about $120, so the net savings for the year is more than $1000. Since the discount plan has no waiting period, treatment can start immediately after enrolling in the discount plan.
In contrast, a dental insurance plan with a premium of $700 per year typically requires that the policy be in force for a full year before orthodontic benefits are available. Most insurance plans provide a maximum benefit of only $1000 per person per year, so the net savings is only $300.
These comments generally do not apply to group dental plans available to businesses with 10 or more employees. These group plans tend to offer stronger benefits simply because the cost of covering all of the employees in an entire company (including the majority of those who will never need orthodontic coverage), buys more benefit than the individual plans.
Beginning January 2012, new individual dental insurance options will be available with a shortened 12 month waiting period for orthodontic coverage. This may have an effect on consumer choices1.
The obvious downside of the discount plans is that treatment is limited to participating providers. Insurance, on the other hand, can be used with any provider. But the number of dental providers participating in these discount plans grows every month. An easy way to check for providers near your home is to enter your zip code online at www.ehealthdiscountplan.com for a complete directory of participating providers in the largest provider network. Alternately, it is increasingly common for patients to ask their dentist if they belong to any discount network and then sign up for that plan. Most dentists will negotiate fees directly with patients, but many patients still find the assurance and simplicity of dental discount plans to be their best option.
1At the time of publication of this article revision we had no indication of the details of these new dental insurance plans and cannot predict how popular this option will be among consumers.
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Opinions expressed are the solely those of the author and do not represent the position of any other person, company or entity mentioned in the article. Information is from sources believed to be reliable but cannot be guaranteed. Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues or a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. Tony Novak operates as an independent adviser under the trademarks “Freedom Benefits“, “OnlineAdviser” and “OnlineNavigator” but is not a representative, agent, broker, producer or navigator for any securities broker dealer firm, federal or state health insurance marketplace or qualified health plan carrier. He has no financial position in any stocks mentioned. Novak does work as an accountant, agent, adviser, writer, consultant, marketer, reviewer, endorser, producer, lead generator or referrer to other companies including the companies listed in the articles on this web site.