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Coinsurance is one of the many costs associated with a dental insurance plan. Different plans come with different coinsurance rates and it is important to understand what coinsurance is and how it works prior to making any decisions regarding dental insurance coverage.
If you are looking for a dental insurance carrier, the coinsurance rate, along with other budgetary considerations like premiums and deductibles, is an important consideration because your coinsurance can greatly impact your overall out-of-pocket expenses.
Coinsurance is one of the common key factors to consider when choosing a dental insurance plan. Coinsurance is a type of cost-sharing, a way of splitting the cost of treatment between you and the insurance company. With coinsurance, you typically pay a set percentage for a procedure, and your carrier will typically cover the rest, subject to limits and exclusions. This percentage varies depending on your plan and type of dental procedures that you need to have done.
Typically, if your insurance company is paying a higher percentage of the coinsurance, you are likely going to be paying a higher premium¹. This isn’t necessarily bad if you have a lot of work that you need done because it means that you may pay less in the end, even with higher upfront premiums.
On the other end of the spectrum, dental insurance plans with lower monthly premiums will typically require you to pay a higher coinsurance percentage. If you do not need much work done, you might benefit from having a lower monthly premium, even if you have to pay more for more extensive procedures.
Coinsurance is typically defined as any insurance where you pay a portion of the total payment against the claim. Dental coinsurance, specifically, is a rate that you pay for dental procedures that you may undergo at the dentist’s office. With coinsurance, you pay for a portion of a procedure and your insurance company pays for the remaining portion, subject to limits and exclusions. The percentage that you pay may vary depending on what type of dental work you need done.
Your coinsurance is the percentage that you will typically pay out-of-pocket while your insurance company will pay for the remaining the costs of your treatment. For example, if you have a 20% coinsurance you would be responsible for 20% of the cost of a procedure while your insurance company would cover the remaining 80%. Coinsurance can apply to cleanings, fillings, or many other types of dental care. It is also important to note that coinsurance does not kick in until you have reached your deductible, until you reach your deductible you are responsible for all costs out-of-pocket.
Copays and coinsurance share similarities except for one main differentiator: Coinsurance is a percentage of the total cost, but a copay may be one, set fee. Most dental plans work on coinsurance formulas.
Coinsurance is different from a copay because a copay is a flat fee whereas coinsurance is based on a percentage. For example, with a copay plan, your cost for a root canal might be a flat $100 fee, regardless of how much the procedure costs. However, with a coinsurance plan you might be charged 20% of the cost for a root canal so how much you pay will depend on how costly your procedure is.
One common advantage of a copay is that it gives you a predictable amount to plan to pay². Coinsurance requires that you pay a percentage of the service. So, the higher the total cost, the more you’ll likely to end up paying. Dental plans copays are usually used more frequently for DHMO plans whereas PPO plans will utilize coinsurance more frequently³.
Coinsurance and copays are typically classified as out-of-pocket expenses. In addition to your plan’s monthly premiums, these expenses add to your healthcare costs. Your costs can vary depending on how much treatment you need at one time, or the complexity of the procedure.
Other related costs include your premium and deductible. Your premium is the amount that you typically pay each month to keep your plan in force, and your deductible is the amount that you pay before dental insurance will kick in.
Coinsurance, copays, premiums, and deductibles are all related in terms of relative cost. Plans that have higher monthly premiums typically have lower deductibles and you pay a lower coinsurance percentage, meaning that if you need work done it will typically cost you less. However, if you only need basic cleanings, it can be beneficial to have a plan with lower premiums but higher deductibles and coinsurance rates.
Before deciding on any dental insurance plan, it is important to understand exactly how much you will be responsible for when you need dental work done. It can seem like a good idea to simply go with the lowest monthly premium, but this could cost you more in the long run if you need work done.
Most dental insurance plans place an emphasis on preventive care. You may find your plan pays 80% or more for cleanings, exams, and X-rays twice each year. Most dental insurance plans also have a yearly maximum. Reaching the maximum means that you will be responsible for all treatments out-of-pocket after the yearly maximum is reached. This can make it difficult if you need multiple expensive procedures such as a root canal with a crown on more than one tooth.
If you need more extensive treatment, consider a phased plan that takes advantage of multiple insurance benefit years. For example, if you start treatment in the second half of the year and you know the annual maximum will renew in January, you could take advantage of two benefit years within a few months. This extends your coverage and allows you to get your full benefit with a minimum cost to you out-of-pocket.
After you have reached your deductible your coinsurance for different procedures will kick in. This means that you can take full advantage of your insurance plan up to your annual out-of-pocket maximum. .
Understanding coinsurance is only one part of understanding your dental insurance plan.
Coinsurance, premiums, and deductibles can all seem like a complicated thing; however, they can be simplified by doing some basic research. Before making any choices regarding your dental health or insurance needs it is important to have all of the information that you need. Being informed allows you to make your decision based on facts and with the big picture in mind. Guardian Direct® has a vast library of resources designed specifically to help you make the best choices for yourself and your family.
This is not dental care advice and should not be substituted for regular consultation with your dentist. If you have any concerns about your dental health, please contact your dentist's office.
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https://www.healthcare.gov/glossary/co-insurance/ accessed June 2021
https://www.investopedia.com/terms/c/coinsurance.asp (2021) accessed June 2021
https://www.webmd.com/health-insurance/dental-insurance-overview (2020) accessed June 2021
Brought to you by The Guardian Life Insurance Company of America (Guardian), New York, NY. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, investment or medical advice.(exp.10/23)
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