Navigating Dental Insurance: PPO, HMO, and YOU
How Dental Insurance Works
At the end of 2016,around 66% of Americans had some time of dental insurance, making it a popular option for access to dental care. Dental insurance can be offered by your employer (where your employer pays a portion of your annual premium), or can be self-funded by you. There are a lot of dental insurance options out there, however, the majority fall into one of the following categories: HMO, PPO, and Indemnity.
Perhaps the first, most important thing to note about any type of dental insurance is that IT IS NOTHING LIKE MEDICAL INSURANCE. In a Simple Dollar article written by Meghan Nesmith, an insurance coordinator at a dental practice in Sacramento notes, “Dental insurance needs to be thought of more like an assistance plan, not a full, comprehensive plan.” This is because insurance plans cover a certain percentage of a procedure cost, have annual maximums that are the maximum amount they will pay out in any year, and can include deductibles and co-pays. With that in mind, let’s break down the different categories:
HMO: Health Maintenance Organization
HMO Plans are considered the most restrictive of the insurance plans, but can also be the lowest priced. With an HMO plan, you must see an HMO provider–there is no coverage outside of the HMO network. However, some HMO Plans do not have annual maximums, although they will have co-pays for procedures (like $5-$10 for cleanings and exams), and a low deductible (some can be lower than $25). Medicare and Medicaid are part of the HMO insurance network.
PPO: Preferred Provider Organization
PPO Plans allow you to go to an in-network or out-of-network provider, although you will receive the most coverage if you go in-network. PPO Plans typically have higher premiums, or monthly fees, than HMOs because they allow you the flexibility to go to any provider. You will also have an annual maximum that usually varies between $700 and $2000, and an annual deductible of between $25 and $100. If your employer offers a PPO Plan, you may expect to pay between $20-$50 a month for an individual, and if you fund your insurance on your own, then monthly rates can be between $30-$70. Self-funded plans are also more likely to be subjected to a waiting period for services like fillings, root canals and crowns, and to a minimum contract length, such as 12 months.
Dental Indemnity Plans
These plans allow you to go to any provider. You pay for the service upfront, and the plan reimburses you up to a set amount. This allows for the flexibility to go wherever you want for service, but the premiums are usually higher. These plans are common in more rural areas where PPO-network dentists may be few and far between.
For more information on insurance plans, NerdWallet has a great article that breaks down these categories into even more detail.
Which one is for you?
The best way to know which option for dental care is right for you, is to do your research and to speak with your dentist. Your dentist will be able to tell you what work you need done, and help you plan for the future. If you’re someone who is going to need a lot of work done like crowns, implants, or root canals, then dental insurance might not be worth it because once you reach your annual max, you will be paying out of pocket. Perhaps an HSA account combined with a discounted preventive plan like Totalcare makes more sense.
If in the past you’ve needed only a couple of fillings and you’re pretty good about brushing and flossing, then dental insurance may be a good option for you because your preventive care will be covered and the annual max would be enough to include a couple of fillings should you need them. Of course, no one can predict the future, but your dental history can help shed some light on what to expect.