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Dean George is the Marketing Specialist and Content Creator for Dental Insurance
Store and its social media channels. He is a regular contributor to Agent Straight Talk, the
only consumer blog explaining the ins, outs and in-betweens of dental insurance and
discount dental plans. READ MORE

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Deducing Dental Deductibles

Jan 07, 2014

By Dean George
Happy New Year readers! Despite frigid temperatures and frostbite danger for teeth using 10,000 watt mega-charmer smiles, we hope your 2014 is off to a spectacular start.

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Awhile back Agent Straight-Talk blogged about confusing insurance terms. You know the type: terms that are seemingly made from spilled alphabet soup on a Scrabble board sitting atop a Merriam-Webster tablecloth.  But according to a recent survey, just 14% of individuals with health coverage could answer questions about basic insurance terms like “deductibles” and “copays.” 

That’s a surprising finding since the enactment of the Affordable Care Act (ACA) and its individual mandate requiring every American have health insurance or they will dance with the IRS at tax time.

Analysts concluded that if comprehension is that low for the insured, the newly insured may need to be air-dropped into an insurance boot camp for six-weeks or sleep with a Rosetta Stone as a pillow just to learn how to use their health plans.

Let’s see if we can help by exploring what a deductible is and how it works. There are two kinds of deductibles: annual deductibles and lifetime deductibles. An annual deductible is a fixed amount you must spend out-of-pocket before your plan benefits begin. A lifetime deductible works the same way, except you only have to pay it one time as long as you have your plan and maintain uninterrupted coverage.

Unlike many of the new health plans that require beneficiaries to spend thousands of dollars out of pocket each year before their plans pay anything, many dental plans have just a $50 annual deductible. Other dental plans like Dental Health Maintenance Organizations (DHMO’s), and discount dental plans, have no deductibles at all!

How do deductibles work? Fortunately for folks like me, they’re simple. Let’s say your first dental visit of the year involves a routine exam and tooth cleaning at a cost of $100. Because you have a $50 annual deductible that must be paid before your plan pays a dime, you pay the $50 off the top. That leaves a balance of $50.

If your plan pays 80% towards the exam and tooth cleaning you had done, that means the plan will pay $40 of the $50 balance and you pay the remaining $10. Scorecard:

You - $60 out-of-pocket ($50 deductible plus $10 copay)
Acme Insurance Plan - $40 balance

On your second visit of the year, you have the same routine exam but the dentist finds the start of a small cavity that costs $61 to repair. Coupled with the recommended tooth cleaning your bill this trip totals $161.  Since you’ve already paid your $50 annual deductible, your plan pays 80% of the $161 costs, or $128.80. You pay the remaining balance of $32.20. Your scorecard for this visit:

You - $32.20 out-of-pocket 
Acme Insurance Plan - $128.80 balance

Barring any future dental visits during the year, your plan has paid $168.80 for the year, and including the annual $50 deductible, you’ve paid $92.20.  

Naturally you need to calculate the expense of the premium in your overall costs, but think of it like auto insurance. We routinely pay auto insurance premiums with the understanding it’s just part of the expense of driving a car. And we hope like crazy that we’ll never have to file a claim on our four-wheeled Pegasus. 

Likewise, paying the premium on a good dental plan is part of how we protect our teeth in the event of disease, injury or just to maintain peak oral health. Betcha your auto insurance won’t pay for a recommended oil change or tire rotation!

So next time a research study analyst asks you what an insurance deductible is remember what we discussed here and blow them away with your erudition and expertise. Thanks for reading Agent Straight-Talk, and remember to drop by again next week when Felicia will wow you with more insurance linguistics and lingo.

Copyright 2014, Bloom Insurance Agency, LLC©

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