I WILL NEVER BUY DENTAL INSURANCE FOR MY FAMILY
DISCLAIMER: THIS IS MY OWN ANALYSIS FOR MY OWN FAMILY. THIS IS NOT A RECOMMENDATION FOR YOU OR YOUR FAMILY!
One of the most frequently asked question from prospective CrowdHealth members is:
“Do you help fund large dental expenditures?”
The answer has historically been “no.” With that said we have been reevaluating for two reasons:
- We are reevaluating because large dental expenditures happen. It sure would be nice if the Crowd could step in and help.
- We are reevaluating because, like health insurance, dental insurance provides very very little for what you pay. The blog will mostly address this point.
I evaluated two leading dental insurance plans: MetLife and Delta Dental. They were chosen randomly off dentalinsurance.com for a 45 year old male in Austin, TX. Me ;) The details of this plan can be found at the end.
Here is the summary: Dental insurance is a suckers bet. Its basically putting your money on black at the roulette table and “hope” you hit it. “Hope” is such a strange word here given that the only way you are in the money is if you have had a root canal or dental implant.
The biggest issues for me are the wait periods and the maximum caps.
Wait periods – you can’t submit claims to the plan for certain procedures within this period. The plans that I looked at have either 1 year wait period (Delta Dental) or a very low coverage (10% for MetLife) for large expenses within the first year. That means you are paying 1 year of premiums without the benefit of any substantial coverage if something bad happens. If something happens in year 1 then you are toast.
Maximum caps -The caps on coverage are a problem as well. One plan has a cap of $3,000 and the other has a cap of $10,000. That means if something really big happens then you are still out of luck.
Let’s do the analysis (spoiler alert – uninsured wins in almost every scenario)
DISCLAIMER: I used, to the best of my ability, the information that was provided by the website in its description of the plans. I did not read the 100 page detailed fine print on these plans so I cannot ensure accuracy.
Using these plans, I looked at three scenarios. In each scenario I compared my total out of pocket. The Net Loss is how much I pay out of pocket vs how much benefit I get from having the dental insurance.
- Scenario 1: 1 preventive visit during the year. My last preventive visit (cleaning, X-rays) was about $300 so I used that. Here is my Out of Pocket (premiums plus cost of dental service not covered by plan) vs Plan Benefit analysis.
As you can see in this scenario, your total out of pocket Delta is $845.20 (premiums plus deductible plus 20% of your annual exam above the deductible), MetLife $1,056 (premiums, they cover exams). You’d pay $300 for the exam being uninsured. In this case it would best to just be uninsured.
- Scenario 2: 1 preventive visit ($300) and a root canal ($1000…I used the average root canal cost per a google search). Both Delta Dental and MetLife pay for the preventive visit and some of the root canal costs.
In Scenario 2 for Delta you are paying $1,345 out of pocket. They pay for 50% of the root canal above your deductible. MetLife you are paying $2,056 out of pocket ($1056 for premiums, $100 deductible and 90% of the root canal above the deductible). Again, uninsured wins.
- Scenario 3: 1 preventive visit ($300) per year, 1 root canal ($1,000), and one major event during the year (I assume a $6,000 implant for this illustration based upon a real life example from a CrowdHealth member who shared this data). This scenario is a bit more difficult given the structure of the dental insurance plans. Plans have waiting periods and or deductible reductions with time so we have to look at this in scenarios where it takes place in Year 1, Year 2, or Year 3.
Scenario 3 Year 1: If your major dental work (implants) were to occur in the first year of coverage, your out of pocket for Delta would be $7,845 out of pocket. Delta does not cover implants. MetLife would be $7,906. They cover 10% of root canals in year 1. Uninsured would be $7,800.
In scenario three, if you were to have a large health event in year one, it would still make more sense to be uninsured.
Scenario 3 Year 2: If your major dental work (implants) were to occur in the second year of coverage you are now paying two years of premiums, two exams, the root canal and implants. Delta Dental would be $8,660. MetLife would be $6,112. They cover 50% of implants in year two with a max of $3,000. Uninsured would $8,100 ($6,500 implant, $500 root canal, and two years of preventive checkups).
In scenario three year 2, if you were to have a large health event in year two, your lowest out of pocket would be MetLife. You are spending $2,112 in premiums for the opportunity to save $2,000. You are in essence putting $2,000 on black an spinning the wheel. If it lands on black, congrats you saved $2000….but you also had a root canal and implants.
Scenario 3 year 3: If your major dental work (implants) were to occur in the third year of coverage Delta would be $9,346 out of pocket. Delta covers 100% of exams in year 3. MetLife would be $7,068. They cover 60 of the root canal in year 3.
If you were to have a large health event in year three, your lowest out of pocket would again be MetLife. You would save $1,332 by using insurance in this situation. You are spending $3,168 in premiums for the opportunity to save $1,332. Not many people are going to take this bet unless you think there is a very high probability you believe that a major dental expense will happen.
SUMMARY
Here is the way I look at it. I would never choose Delta. In the scenarios above Delta loses to uninsured status every time.
MetLife only wins when we have a big event and even in that case that event has to be more than a year out. The question becomes whether or not I think I will have a big event in the next couple years and how big that event will be. If you think there is a really good chance you’ll have a big event in the $6,000+ range then it might make some sense to get MetLife. You’ll save about $1,000 and $2,000 in this case. However, if you are wrong and don’t have a large event you’ll pay more than $2,000 in premiums for next to no benefit. This is truly a suckers bet.
Look, if you get it free, or really cheap from your employer, have a ball. But for me, I’ll continue to live delightfully uninsured.
We want this to be an accurate analysis to honestly evaluate the benefits of dental insurance. If you see any errors or omissions please send those to hey@joincrowdhealth.com
