What is Better: Indemnity or HMO Dental Plans?
By Susan Braden
The easy answer is: It depends. First, some definitions.
- Indemnity – A sum paid by A (an insurance carrier for example) to B (you or me) for a loss suffered by B. This describes a traditional dental insurance plan in which the patient chooses the dentist, and the carrier covers all or a portion of the bill.
- HMO – Health Maintenance Organization – A group which collects a premium from members and provides a defined set of the dental services which are available. Members must use a particular panel of dental providers, and providers are paid based on the number of patients they treat, not based on services rendered.
- Provider – A dental professional providing services to patients; could be a dentist, or a specialist such as an orthodontist, endodontist, etc.
- Policyholder – A patient who is a member of the plan.
Indemnity plans, also known as traditional insurance, are dental insurance plans in which the policyholder chooses any dentist he or she wishes. The patient pays the dentist directly for services, and is then reimbursed by the insurance carrier by means of a claims process. (You fill out paperwork and send it in to the carrier for processing, then they send you a check.) Typically these plans cover 50%-80% of the cost of dental work, and the remaining
amount is paid by the patient.
"Cost" can be a tricky term, however. Indemnity plans determine cost in two ways:
- Usual, Customary and Reasonable (UCR) – This means the carrier has a formula it uses to calculate the "normal" cost of a procedure.
Deductibles and Maximums
Dental indemnity plans require a set deductible. The patient pays this amount, usually around $50-$100 per year before the carrier begins paying. Indemnity plans may also limit the amount of services covered in a given year.
- Use the dentist you want to use, no exclusive "network."
- See a specialist without a referral.
- Your dentist is paid based on work completed, so no need to fear that he or she will minimize your treatment in order to save time or resources.