An indemnity dental plan is very similar to the PPO dental plan. With this type of plan, you buy a certain amount of coverage ranging from $750 to $2,500 – very similar to a PPO plan. Also like a PPO plan, an indemnity dental plan has a three-tiered structure, meaning it covers preventative services, as well as basic and major procedures. However, unlike a PPO plan, an indemnity dental plan allows people to use any provider; there are no networks.
Instead of operating out of networks, an indemnity dental plan costs are based on UCR (Usual, Customary, and Reasonable). Typically, preventative services are 100% covered while the cost of basic services are split 80/20 between the individual and the insurer. As for major dental services, the cost is split 50/50. Again, these plans are very similar to PPOs.
Indemnity Dental Plan with Benefit Increases
However, there are some indemnity dental plans that increase benefits every year. For example, an indemnity plan, much like a PPO plan, covers 100% of preventative services. As for basic and major services, the insurer covers 60% of the cost once you meet the deductible. Then, the next year the split changes from 60/40 to 70/30; so while the insurer covers 70%, you cover 30%. Again, the payment split changes, increasing from 70/30 to 80/20. There’s even a carrier or two that have a benefit increase of 90% by the fourth year, leaving only 10% of the costs to you. So though a crown may cost $500, you’ll only have to pay $50 because the insurer covers the other $450.
Even more impressive, the benefit increases significantly reduce the costs of major dental procedures. Whereas PPO plans and other indemnity plans, the insurer only covers 50% of major services, but an indemnity plan with benefit increases can cover up to 90%. For instance, this type of plan can cover $1,350 of a $1,500 root canal so you only have to pay $150 out-of-pocket; this is an incredible savings. This plan gets better every year, and by the fourth year it covers most of the costs. With potentially 90% of costs covered by year four, there’s not another plan that will beat the coverage offered by an indemnity dental plan with benefit increases. Moreover, if you look at the price of this type of plan versus a discount dental plan, there’s not much difference.
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