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Which Dental Insurance Plan is Best for You?

There are several types of dental insurance plans.

Your employer has just informed you that your company has switched dental health care plans -- again. Most recently, you were covered under a PPO; before that, it was a traditional indemnity plan; and now, it's a DHMO.

Your employer stressed the company's need to reduce its health care costs. You nodded your head, eager to show your support and thankful that there were other areas they could cut costs before cutting heads.

But what does the change in benefit plans mean to you?

Today, there is a lot of confusion when it comes to dental health care plans. Pick up any plan book and you'll see why. Required co-pays, care restrictions, plan limitations -- it's no wonder we have a tough time deciphering the differences among plans -- it's difficult enough to understand our current plan.

Why all of the confusion? In the past, there was traditional indemnity insurance and a modified model called a PPO. Several years ago, however, we witnessed the introduction of a DHMO. This managed care program segmented the dental market and created even more choices for dental consumers.

Today, there are three primary models operating in practices across the country: DHMOs, PPOs and traditional indemnity insurance. What are the key differences among the three? And more importantly, what are the pros and cons of each method of delivery from a quality of dental care standpoint?

Read on to find out...


The DHMO (Dental Health Maintenance Organization) is similar to a medical HMO, offering a panel of dentists from which members select a primary care provider. Under this model, access to providers and procedures are restricted, although most DHMOs provide preventative care at no charge. For non-routine services, patients may be required to co-pay a substantial fee. And in some cases, expensive procedures may not be covered at all.

Because of all of these restrictions, DHMOs are the least expensive of all dental benefit plans.

Dentists who participate in a DHMO are paid a pre-determined, per member fee each month, called capitation. Because doctors are paid a fixed fee regardless of how many plan patients they treat, the reimbursement schedule unintentionally rewards dentists for under-treating patients. After all, the more dental work they do or the more time they spend with patients, the less they earn. It is, therefore, in the doctor's best financial interest to provide minimum treatment. But what about the patient's best interest?

Because doctors are at risk of losing money with each patient they see, they may restrict the number of DHMO patients they see each month. Also, turnover in DHMOs is fairly high, making it difficult to establish a long-term relationship with a dentist.

The bottom line: DHMO is a Health "Maintenance" -- not "Improvement" Organization. Patients who want to enhance their oral health care would be hard-pressed to have their needs met under this delivery model.


The dental PPO (Preferred Provider Organization) has both an in-network and out-of-network option. This means more freedom of choice when it comes to selecting a dentist -- members who do exercise this option are penalized with higher out-of-pocket fees. PPOs also charge higher premiums than DHMOs.

Dentists who participate in a PPO agree to perform services at a reduced rate. Often, the reimbursement to the dentist is less than the actual cost of the service. As a result, profitability is eroded which means they need to make up the difference somewhere else in their practice.

Many doctors who work for a 'reduced fee' will have to work longer hours to the extent that their fee is reduced. Others will cut corners, spend less time with PPO patients, or find procedures to do that are not covered under the member's plan. That way, they can charge additional fees and improve their profitability.

Indemnity Plan

The indemnity dental plan operates as a more traditional insurance program. Employees have the freedom to choose any dentist they wish. In return for this freedom of choice, they pay higher premiums for the indemnity coverage and also higher out-of-pocket expenses for services.

This is the most expensive type of dental plan.

The annual maximum for indemnity insurance has changed only slightly in the last 40 years. Premiums, on the other hand, have skyrocketed. Under the indemnity plan, insurance pays a percentage of the fee -- usually 80 percent for fillings and dental cleanings and 50 percent for tooth crowns and dental bridges. Some procedures are excluded; others require waiting periods. Most pay 100 percent for preventative care.

Under the indemnity program, a patient who is getting a crown will have to pay their annual deductible, plus their portion for the crown. The insurance company pays, at best, less than half. I say 'at best' because the insurance company sets its own UCR Fees -- Usual, Customary & Reasonable Fees. In other words, they dictate what a reasonable fee is -- leaving it up to the patient to pay the difference.

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