March 3, 2009

Should you buy dental insurance?

I have dental insurance at work but not everyone does. If I'm able to retire early then I should figure the cost of dental work. Dental work seems like a decent candiate to get insurance fore, but I'm not sure if dental insurance is worth it or not. Dental work seems to run $100-$200 for typical checkup and cleaning and then maybe a few hundred for xrays and filings. Major work like root canal or oral surgery is several hundred to a couple thousand. In my experience usually all I spend on dental work is around $200 a year for my routine cleanings. Of course you're running the risk that you might need a root canal or a couple filings done and those could run you a couple thousand.

eHealthInsurance has quotes on dental insurance plans. You can get a quote based on your family. For example a married couple would could get insurance for $45-90 a month. I checked the price for a couple in their 30's and a couple in their early 60's and the price didn't change. That doesn't seem too expensive. But the problem with the insurance is how little they actually cover. The plans have $50 deductibles, coinsurance of 0-70% and annual payments of $750-$1000 per person. So you're looking at paying $500 to $1000 for a maximum payout of $1500 to $2000. Given how infrequently most adults actually need major dental work, this doesn't seem like a good buy at all.


How much are you likely to spend?

First for reference we could figure the average spending per capita. According to the American Dental Association the total spending on dental care in 2005 was $86.6 billion. With about 295 million people in 2005 that means we spent about $300 annually per capita on dental expenses.

But each person is different. I think we can tell to some degree how likely we are to need dental work. Some of us never need any filings and others have frequent dental problems. Based on the health of your own teeth you can adjust your expected annual costs up or down to some degree.

Given that insurance runs $500-$1000 range annually for a couple and per capita spending is only $300 on average the payout on the insurance is not very good. It makes more sense to self insure for dental expenses.

Dental plans as an alternative

With a dental plan you pay a fixed annual rate to join the plan. The plan isn't insurance but more like a discount card. When you are a member you get your dental work at a discount rate. For example if an adult teeth cleaning normally costs $83 then your plan rate might be just $37 and if a filing is $135 usually then the plan discount rate might be just $66.
I checked Dentalplans.com and got some quotes there. The cost of the plans runs $80 to $145 for individuals or $130 to $200 for families. With the dental plans you can nearly break even on out of pocket costs if all you do is have 6 month checkups and cleanings. And if you do have high cost procedures then you can save a lot more than your annual payment.

Keep in mind that not all dentists take every dental plan. So it would be a good idea to research plans with specific dentists in mind. You can look up your current dentist at Dentalplans.com and see what plans they take and go from there. My current dentist doesn't seem to take any of their plans. But I found a highly rated dentist at DR Oogle and he takes one of the plans.

Use an HSA to pay for dental costs.

If you have or can get a Health Savings Account for your normal medical insurance then you can put extra money into the account to help pay for your dental costs. Since the HSA funds are pre-tax you'll stretch your dollars further. My marginal tax rate is about 34% right now so paying with HSA funds is like getting 34% off all my dental costs.


In summary:

Given the fairly high cost of dental insurance and how little they actually pay out, I don't think individual dental coverage is a good buy. Its probably best for most people to self insure themselves for dental costs.

A dental plan might help reduce your dental costs. Check out he plan and its discounts in advance to see if it will work out for you.

Using an HSA to pay for dental expenses will definitely save you money.

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