If you are one of the many self-employed or work for an employer that does not offer any insurance benefits, you will need to purchase a health and dental policy on your own or with the help of an insurance agent. To some, this may seem overwhelming, but it really just takes some research to better understand how insurance plans are organized.
When reading a health insurance policy, you will find specific insurance terms. These terms tell you what you are responsible for paying and what the insurance company will pay.
Copay – This is a cost-sharing arrangement where the insured pays a predetermined amount and the insurance company pays the rest. Example: You have a $50 copay for a doctor visit where the cost is $80. You pay the $50 and the insurance pays $30.
Deductible – This is the amount that the insured must pay before the insurance begins to pay. The higher the deductibles, the lower the monthly cost.
Coinsurance – This is another cost sharing arrangement, but in this one you pay a certain percentage and the insurance company pays another percentage. Example: Your office visit costs $80 and you are responsible for 30%, which is $24, so the insurer will pay 70%, which in this case is $56.
Waiting Period – This is one way insurance companies cut costs and avoid paying for pre-existing conditions. Waiting periods vary, but you may find waiting periods of 1 to 12 months for services that will later be covered.
Dental insurance companies offer many plans, but most fall into the category of a savings plan, a network plan, or a fixed benefit plan. Each plan will address preventive, basic, and major services. Consumers need to be educated about what all that means because the three basic types of plans are so different.
The dental savings plan is affordable and only offers in-network discounts. Most advertising discounts range from 20% to 65%, depending on the vendor you choose. Some people think that these plans are worthless and don’t offer much benefit, but they are perfect for people who only need cleanings, few basic services and no major services. The other thing to consider is that the network and fixed benefit plan have a maximum amount of benefits per year. This plan doesn’t, so you might as well upgrade a network plan.
A network plan has copays and deductibles. It offers more coverage with an emphasis on preventive services and happens to be the most expensive option. This plan will typically pay 100% of your preventive services and percentages of your basic and major services. Some will have a waiting period on these services and some may not cover core services at all. You must determine if you are at risk of needing more services or if you can complement the plan with a savings plan.
The fixed benefit plan pays predetermined cash for covered services. If your family can’t afford an in-network plan, this is your next best option. This does not have deductibles, but you must pay the difference between the fixed benefit and the dental bill. The best thing is that there are no networks so you can choose the dentist you want. You can also become a better consumer because you can ask the dentist what his prices are to maximize your fixed benefit. This plan can also be supplemented with the dental savings plan because the money is sent to you, not the dentist.
Understanding the specific terms of insurance can become daunting when looking at a contract that can be more than 30 pages long. Consumers should do their research, but I recommend talking to a professional. The licensed insurance agent has been trained and understands the details of the contracts. They are better equipped to explain nuances you might miss.
