If you are one of the many self-employed people or work for an employer that does not provide insurance benefits, you will need to purchase a health and dental policy on your own or with the help of an insurance agent. This may seem overwhelming to some, but it really just takes a little research to better understand how insurance plans are organized.
When reading a health insurance policy, you will come across insurance-specific conditions. These terms tell you what you have to pay and what the insurance company will pay.
Copay – This is a cost-sharing agreement 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 $50 and insurance pays $30.
Deductible – This is how much the insured must pay before the insurance starts paying. The higher the deductible, the lower the monthly costs.
Coinsurance – This is another cost sharing agreement, but in this one you pay a certain percentage and the insurance company pays a different percentage. Example: Your office visit costs $80 and you are responsible for 30%, which is $24, so the insurer pays 70%, which in this case is $56.
Waiting Time – This is a way for insurance companies to cut costs and avoid paying for pre-existing conditions. Waiting times vary, but you may encounter wait times from 1 to 12 months for services covered later.
Dental insurance companies offer many plans, but most fall into the category of a savings plan, a network plan, or a defined benefit plan. Each plan covers preventive, 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 ads offer discounts from 20% to 65%, depending on the provider you choose. Some people think these plans are worthless and don’t offer much benefit, but they’re perfect for people who just need cleanings, few basic services, and no major services. The other thing to keep in mind is that the network and fixed fee plan have a maximum number of fees per year. This plan doesn’t, so it could also be 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 typically pays 100% of your preventive services and percentages of your basic and majors. Some have a waiting period for these services and some don’t cover major services at all. You need to determine if you are at risk of needing major services or if you can supplement the plan with a savings plan.
The fixed-fee plan pays predetermined cash for covered services. If your family can’t afford a network subscription, this is your next best option. This does not have an excess, 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 regular benefit. This plan can also be supplemented with the dental savings plan because the money is sent to you and not to the dentist.
Understanding insurance-specific terms can be daunting when looking at a contract that can be more than 30 pages long. Consumers should do their research, but I recommend that they talk to a professional. I am licensed as an insurance agent and trained and understand the details in contracts. They are best prepared to explain the nuances that you might miss.