Dental Insurance vs. Dental Discount Plans

Even though dental care isn't as expensive as health care, it can still be pretty pricey. Dental insurance and dental discount plans can help you manage those costs when they come up.

So, the question is: which is best?

To answer this question, you have to understand the differences between dental insurance and dental discount plans. You also have to consider what your dental needs and financial situation look like.

What is dental insurance?

Dental insurance gives you access to discounted dental rates and cost-sharing benefits. Dental insurance usually covers preventive care at high rates, or even fully. Other types of treatments are categorized as basic and major restorative services. Coverage rates for these vary, but are typically higher for basic services than major services.

Some dental insurance plans cover cosmetic dental care or braces, but these services aren't covered by typical dental insurance plans.

It's common for dental insurance plans to exclude coverage for pre-existing conditions, so if you're shopping for a plan because you need a root canal, you may have to do more digging to find a plan that will cover a pre-existing condition.

Dental insurance plans also have networks of care providers. With a Dental Health Maintenance Organization (DHMO) plan, the insurance company will only cover dental care received from dentists in their network. A Preferred Provider Organization (PPO) plan gives you more flexibility when choosing a dentist because it offers both in- and out-of-network care. Keep in mind that coverage rates for out-of-network care are usually lower than for in-network care.

With a dental insurance plan, you'll pay a monthly premium and out-of-pocket costs. Dental plans have an annual deductible. Once your out-of-pocket expenses have hit the annual deductible, the insurer will take more responsibility for your dental costs up to a certain point.

Dental insurance plans have annual maximum benefits. This is the most the insurer will pay towards your out-of-pocket in a given year. Once the insurer has paid out your annual max, you'll resume full responsibility for your out-of-pocket costs. Most plans have a per person annual max.

It's common for dental insurance to have waiting periods, especially for basic and major restorative services. These can be anywhere from three months to a full year depending on the plan. If you had comparable coverage prior to enrolling in a plan, you may be able to have the waiting period waived.

Some dental plans have no waiting periods. These plans usually have increasing coverage rates for services the longer you keep the plan. These increasing coverage rates usually max out after the second year. You may also end up paying higher premiums for immediate coverage than for a plan with a waiting period. Keep in mind that these plans may not cover pre-existing conditions.

Read "Dental Insurance with No Waiting Period Guide: What You Need to Know" to learn more and get expert insight on these plans.

When you evaluate a dental insurance plan, look at the covered services, premium, network, deductible, cost-sharing rates, and annual maximum benefit. Understanding how the full insurance plan works together will help you determine the value offered by the plan and whether it's a good fit for your needs or not.

What are dental discount plans?

When people refer to dental discount plans, they usually mean plans offered by a third party. Some dental offices offer their own discount programs to patients.

Remember: dental discount plans and programs are not the same as insurance.

Third-party dental discount plans

Dental discount plans are also called dental savings plans. These plans have set fees for dental services. The companies have contracted with dentists who accept the discounted rates for their services.

If you get a dental discount plan, you'll pay a small premium and then be fully responsible for your out-of-pocket costs. You don't have to worry about waiting periods. Discount plans tend to be explicit about what each covered service will cost you out-of-pocket, which is nice because sometimes insurance plans can make costs difficult to estimate.

Keep in mind that dental discount plans advertise steep discounts, which means that it may be difficult to find a dentist in your area who accepts your plan. Before you enroll in a plan, see which dentists accept your discount plan near you.

In-house dental discount programs

Your dentist may offer some in-house dental discount programs with similar discount percentages as those offered by a third-party plan. If you have a good dentist whom you trust, these in-house programs can be a better alternative to a dental discount or dental savings plan from a third party.

Bruce Hogan, Software Pundit CEO, recommends considering the discount rate, covered services, and subscription fees when considering an in-house dental discount program.

"How much of a discount the plan provides and which services are included. Dental membership plan discounts range between 10–40 percent of common services. Most plans include basic cleaning and some additional services. Some practices might offer family plans for broader coverage.

How much you have to pay upfront to begin receiving services. Some discount plans are paid annually, which means you have to pay 12 months of fees to begin receiving services. Others are paid monthly, which allow you to pay significantly less to begin receiving services."

Keep in mind that the subscription fee pays for the discount. In some cases, you may be better off planning for your dental expenses and setting aside money to pay for these costs.

Should I get dental insurance or a dental discount plan?

Now to the big question: which is better — dental insurance or a discount plan. It boils down to your budget, dental health, and what risks you want to assume. Whichever direction you go, you'll want to find a trustworthy dentist to ensure that you receive quality care and medical advice.

Reasons to choose dental insurance

Between the two, dental insurance is the better option, especially if you need a higher amount of dental care because it usually offers more protection for out-of-pocket costs through its cost-sharing structure.

"If you need a lot of dental work done on your teeth, it would be a better option to go with a traditional dental plan," recommends Dr. Jacqueline Fulop-Goodling, D.M.D., P.C.

If you can afford a traditional dental insurance plan, it's also the safest option because you'll benefit from the insurer's internal review and government regulation. 

Even though insurers are notorious for difficult pre-authorization processes and issues with claims, these penny-pinching practices have a side effect of protecting patients.

"In looking after the expenditure of its money, the insurance company indirectly looks after patient spending. Please don’t conflate this as the goodwill of the insurance industry or any genuine concern for patients. Their primary obligation is fiscal returns for their investors. Dental services that are determined to be of limited value, unethical, or dishonest will be denied for payment. Dental services that are outside the range of covered benefits, but may be of value to patients, also will be denied," writes Michael W. Davis, DDS in "Misrepresentations to Consumers: A Dark Side to Dentistry".

Insurers are also subject to government regulation and oversight, which is another layer of protection for policyholders and patients. While dealing with insurance companies can be a headache at times, your risk of receiving unnecessary dental care is much lower.

Reasons to be cautious about dental discount plans

While it's a good practice to explore all of your options, whatever kind of dental discount plan you consider, you need to realize that there is less regulation on these programs and the kind of care you receive. It's even more important with these plans to see a trustworthy dentist.

"True insurance plans are required by state statutes to meet specific requirements:

1. Valid insurance plans must be registered w/ the state’s insurance commission, and are regulated by the same authority. The state insurance commission has oversight authority with insurance vehicles. They have the power to accept public complaints, preside over hearings, and take a variety of actions in the public interest depending on state law.
2. Valid insurance companies are also required to set aside a 'claims reserve.' The amount or percentage varies with the state statutes.

None of that is true for discount healthcare plans. They have no state or federal governmental oversight and no claims reserve. It’s the wild west," says Davis.

Third-party dental discount plans are not permitted in some states due to legal restrictions. Other states do regulate these plans, but not every state does.

These plans don't just lack government oversight, they also don't have the same review process that insurers have when processing insurance claims. This is the case with in-house dental discount programs.

"In-house dental discount plans completely lack any oversight of a state insurance commission, and often very importantly, the insurance company’s internal review process. Insurance companies don’t like to pay out on billings, and especially fraudulent billings. Their claims review process is targeted to pick up “red flags” in provider billing errors, abusive billings, and fraud.

Thus, with an in-house discount dental plan, the patient must place complete trust in the facility providing services and the charges for those services. There exists no outside oversight. Patients are fully on their own," says Davis.

In addition to the lack of oversight, you'll also limit your choice of dentists and risk receiving dental care you do not need.

"Almost no dental clinics accept the plans because remuneration under the plan for dental services is often below overhead costs to provide those services.

Dental clinics which accept discount dental plans are often operating under a bait-and-switch business model. Unless they can upsell patients additional services, which aren’t covered by the discount dental plan, customers will be shown the door. Thus, ethical dental operations want no part of this," says Davis.

While these plans are riskier than insurance, a dental discount plan may make sense for you in some cases. Fulop-Goodling shares an example:

"If your teeth are in good shape and you need an occasional check-up, and cleaning, a dental discount plan can save you a lot of money."

If you're on a tight budget and opt for a dental discount plan, watch out for upselling from your dentist and be prepared to navigate your care without an insurer's or government commission's oversight.

You may also want to reach out to your dentist to see what they charge for cleanings. It may be cheaper for you to pay the dentist directly than working with an insurer or dental discount plan.