A lot of people are confused between dental insurance and dental finance-which one is worth the money. While many resort to insurance, some prefer finance. They both have their own pros and cons. Insurance is tricky whereas finance is full of jargon terms. In this post, I will give you a complete, neutral overview of both the terms so you can decide which one works better for you.
Disclaimer: I’m an expert in dental finance, not in dental insurance; and if you see that I have misrepresented any of the information in insurance section, please let me know in the comment section.
What is dental insurance and dental finance?
- Dental insurance is a type of medical insurance, designed to pay a portion of the costs associated with dental work. Don’t miss the word-portion!
- Dental finance is a type of loan taken by patients when they can’t afford the treatment or when their insurance doesn’t cover the complete cost of the treatment.
Choosing dental insurance!
When you sign up for insurance, you will come across different plans to choose from, including dental insurance through HMOs, PPOs, and DPOs. Each plan type will have a premium linked to it, which you will pay every month to assure your coverage for the year.
- HMOs and DMOs-When signing up for insurance through an HMO or DMO, you will see only an in-network provider.
- PPOs- Insurance through PPO may go in-network or out-of-network.
The difference in co-pays, coverage, deductibles, and maximums is completely dependent on the plan type you choose. The general breakdown is as:
- Preventative: 100% (Includes x-rays, cleanings, oral exams)
- Basic: 80% (Includes fillings, periodontal maintenance/cleanings)
- Major: 50% (Includes partials, crowns, fixed dentures, and implants)
- Co-pay: This is the percentage or a fixed dollar amount, which is paid up front at your dental visit. For example, 80/20-insurance pays 80% while you pay 20%.
- Yearly Maximum: This amount is covered by your insurance, which usually ranges between $1000-$2000.
- Deductibles: This amount is paid out of your pocket before specific coverage kicks in. It is generally $50.
Imp. Note: With insurance plans, you get what you pay for. It means if you choose high tier plan, you will pay more in premium, but it will have a better coverage and may include out-of-network providers too.
In-Network vs Out-of-Network Providers
In-Network: You are given a list of dentists that are contracted by the insurance provider to provide dental services at a fixed rate.
Out-of-Network: You can go to any dentist that is not the list provided by the insurance provider.
An in-network provider has contracted, set fees. They aren’t paid as much as an out-of-network provider. For example: If you go to an in-network provider for a routine cleaning, for which the rate is set at $50 by your insurance provider, the dentist will get paid only $50. Whereas, if you decide to go to an out-of-network provider for a routine checkup, who, as a matter of fact, charge $80 for a routine cleaning, then you might need to pay additional amount. Why? Because, although the insurance says they cover this service at 100%, they are accountable to pay only for what they deem “reasonable and customary” based on the amount charged by other dentists in the same geographical area. Therefore, in this case, insurance may end up picking $68, leaving $12 for you to pay to the dentist.
Choosing Dental Finance!
Dental finance comes into picture when you are short of money to pay for the expenses of the dental work. There are many third-party lenders that offer finance, many times at no or low interest. Some dentists also offer in-office payment plans or financing to their patients. Selecting the right option to get financed for dental work can make a huge difference in how much you end up paying for the procedure. Currently, there are three major dental finance options to consider:
a) Third-party lenders
Nowadays, there are tons of business competing online to earn your business. All you need to do is find them, perform a credit check, and see if you are eligible for the loan or not. Some lenders offer loans for bad credit as well while many are looking for borrowers with excellent credit.
The catch: In general, the dental finance offered by third-party lenders incur a small interest on the total amount for a short period of time. However, if you don’t pay the loan within the advised timeline, you are in for a trouble. The rate of interest can go as much as 30% on the balance going forward. So, if your credit score is good, and you can pay the installment easily, go for it.
b) Healthcare Credit Cards
These cards are designed under the guise of a special payment plan, mainly for the medical and dental industry. A particular amount is given with this card, which you can use to pay off the dental work’s bills. Primarily, the interest offered on these cards is 0% if the balance is paid in full within a year.
The catch: Similar to third-party loans, if you fail to pay the amount within 12 months, the standard APR can reach as much as 29%. Also, if you have a bad credit history, don’t bother applying.
c) In-house financing
Many dentists offer this financing option through third-party lenders. Dentists tie-up with third-party lenders to offer their patients flexible payment options. They may or may not check your credit history; it completely depends upon the dentists. It is an ideal option for patients with less than stellar credit.
The catch: Unlike other financing options, it completely depends on the dentist how much interest rate should be charged after a certain period. A dentist can charge as much as 29% and as low as 10%. Good rapport with your dentist works well in this case.
Do you really need either of these two options?
This question is probably on everyone’s mind, and I’m not sure what is the right answer. It completely depends upon your hygiene. Do you regularly go for exams, x-rays, and cleaning? Have a great hygiene? If the answer is yes, then you are good without an insurance because you will be overpaying in premiums when you could have paid $200-$400 cash for the whole year.
However, if your mouth is a hot mess, and you need extractions, crowns, fillings, etc., you definitely need an insurance because treatments like these is undoubtedly creeping into the thousands. But, keep in mind that, at best, your insurance will cover $2000 per year. You could use up your insurance for some of the dental work and pay the rest out of your pocket.
In case, you don’t have enough saving or can’t afford the treatment right away, turn to the dental finance option. But, make sure that you familiarize yourself with all the dental finance options and their terms, so as to avoid paying any financial penalties.