If you are one of the many self-employed or work for an employer that does not offer any insurance benefits, you will have to shop for health and dental policy on your own or with the help of an insurance agent. For some this may seem overwhelming but it really only takes some research to gain better understanding on how insurance plans are organized.
When reading a health insurance policy you will encounter insurance specific terms. These terms tell you what you are responsible to pay and what the insurance company will pay.
Copay – This is a cost sharing agreement in which 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 insurance pays $30.
Deductible – This is how much the insured is responsible to pay before insurance will begin to pay. The higher the deductibles, the lower the monthly cost.
Coinsurance – This is another cost sharing agreement but in this one you pay a certain percentage and the insurance company pays another percentage. Example: Your office visit cost $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 a way for insurance companies to cut cost and avoid paying for pre-existing conditions. Waiting periods vary but you may encounter waiting periods anywhere from 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 preventative, basic and major services. Consumers need to be educated on what all that means because the three basic types of plans are very different.
The dental savings plan is cheap and only offers network discounts. Most advertise discount ranges of 20% to 65% depending on which provider you choose. Some people think these plans are worthless and do not 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 does not so it could also augment a network plan.
A network plan has copays and deductibles. It offers more coverage with an emphasis on preventative services and happens to be the most expensive option. This plan will typically pay 100% of your preventative services and percentages of your basic and majors. Some will have a waiting period on these services and some do not cover major services at all. You must determine if you have a risk of needing major services or if you can augment the plan with a savings plan.
The fixed benefit plan pays predetermined cash for covered services. If your family cannot afford a network plan, this is your next best option. This one has no 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 any dentist you want. You can also become a better consumer because you can ask the dentist what their prices are to maximize your fixed benefit. This plan can also be augment with the dental savings plan because the money is sent to you, not the dentist.
Understanding insurance specific terms can become daunting when looking at a contract that may be over 30 pages in length. Consumers must do their research but I recommend they speak with a professional. I licensed insurance agent has been trained and understands the specifics in contracts. They are best prepared to explain the nuances that you might skip over.