Is your Dental Insurance working for you?

Annual per capita healthcare spending in the USA rose over 6% in 2019, almost twice as much as inflation rate, to over $13,000 per person. However, the portion of this attributable to dental care was only $509 for every man, woman, and child in America, according to Centers for Medicare and Medicaid Services. According to the Bureau of Statistics, Americans spent 3 times as much on alcohol and tobacco as on dental care, 2 times as much on hair care, and 1.5 times as much on the interest on their credit cards as on dental care last year. Then why does dental care seem to be so expensive? If you track and average your individual dental expenses over a long period of time, you will have your answer. Dental expenditures tend to occur for the most part in large increments. Why? Another statistic may shed light. Only 50% of Americans and only 17% of consumers without dental insurance visit a dentist in any given year and it may be most of the same 50% who don’t visit the dentist the next year also. Dental problems don’t manifest to the average person until there is discomfort, malfunction, or an accident. So unnoticed dental problems become periodic major dental expenditures.

Dental insurance is usually offered in a package with health insurance as an Employer Paid/Provided dental insurance benefit, but do you know what would be MORE beneficial for the employee? Keep reading.

30 years ago, the average annual maximum for dental insurance benefit was $1,000. Today, that figure has not kept pace with inflation. People (retirees, self-employed, and HR) who have to deal directly with dental insurance plans and policies and companies know the frustrations that come with long agreements, annual maximums, waiting periods, claim delays, and denials. It is almost impossible for the average person to calculate how much of a benefit they are getting from their dental insurance. We have calculated a comparison of patient out-of-pocket expense for a typical root canal/post and core/crown between typical dental insurance versus our Value Dental Plan, factoring in the premiums, deductible, annual maximum coverage, Individual Insurance Company “usual and customary” limited procedure fees and allowance percentage for these procedure categories. This treatment typically takes two months to complete. We have also factored in the delay of finishing these procedures into the following year because of exceeding “annual maximum coverage limit” with that year’s premium payment, etc. If the patient delays completion of this treatment scenario into the following year, the insurance plan would save the patient $500 in out-of-pocket payment versus Value Dental Plan. If the patient completed this treatment scenario in the typical two-month scenario (within the same year), this difference would be reduced by $380 out-of-pocket. Is there a better option? (Medical Supplement -Facebook post on March 3rd, 2020) Keep reading.

Now consider another even better option. Employer paid/provided dental insurance is viewed as an employee AND employer benefit because the policy premium along with the medical insurance premium is a tax-deductible expense for the employer. There is a limited tax deduction for personal dental/medical expenses for both the employee and the employer UNLESS the employer were to provide a Health Savings Account for him/her and the employees instead of only one policy for every employee and employer. HSA’s are an investment vehicle that earns tax exempt deductible interest and provides unlimited tax deductible medical and dental expenditures while giving the employee freedom to shop for and choose their own dental insurance plan or Value Dental Plan. Under this scenario, considering the dental treatment calculated earlier, the difference in out-of-pocket payment between dental insurance and Value Dental Plan would be nullified after the yield from investment into the HSA is factored into the calculation.

The history of HSA’s (initiated in 1996) is that typically they were a threat to the control of healthcare held by the health insurance industry which is the ONLY industry in America that has been EXEMPT from Sherman Anti-Trust Regulation through the McCarron Ferguson Act which has allowed them to collude on pricing since the Baby Boomer population explosion and elevate the percent of GDP attributable to healthcare from 7.8% in the 1970s to almost 20% today. No other sector of the GDP has even come close to that. The health insurance industry lobbied to have employer paid policy premiums become tax deductible, seeing that as a way to diminish consumer-oriented pricing of healthcare which would exert more pressure to keep prices down. HSA’s were initially INDEPENDENT of health insurance corporations but again the insurance industry lobbied to “be able to participate in HSAs around 2000 and were granted permission by Congress. They soon bought out all of the INDEPENDENT HSAs and the cost of healthcare escalated over the next few years. But they are still the best way to exert some control over healthcare costs while earning a yield from investment. How so? It’s because it places control directly back into the healthcare consumer’s hands on how and where to shop and spend their healthcare (including dental care) dollars while earning a fully deductible yield on their HSA investment. So now, the healthcare consumer is not confused by dental insurance calculations nor constrained by dental insurance limitations on coverage or yearly maximums. Coupling an Employer paid/provided Health Savings Account with our Value Dental Plan is a great way to invest, save and benefit from dental care. Having an HSA gives each employee his or her own preference of doctors as well as insurance policy or our Value Dental Plan.

If the employee had an employer funded (tax deductible for both the employer and employee) HSA account or even if the employer funded the employee’s retirement account with what would have been the dental insurance premium and the employee opened and funded their own HSA (up to $1,000/year), the employee would earn more yield on both the increase in retirement account funding plus earn a yield on his/her HSA with unlimited broader healthcare expenditures (not covered by traditional insurance). There are also contribution tax deductions from FICA, FUTA.