When it comes to health services, dental insurance is often one of the many plans you’ll encounter. Your employer can offer it or you can voluntarily apply for one. But while they seem to be great plans to have, there is more to dental insurance than meets the eye. In this website, you’ll explore the business model of dental insurance and a few things you should know before getting one.
What is Dental Insurance?
Dental insurance is a kind of health insurance that pays for the whole or part of your dental services. It works like medical insurance where a provider gives you coverage in the form of a yearly amount and it is up to you to use it on dental services. Dental insurance come in different types – individual, family, or group. Usually, group dental insurance applies to companies who will get dental plans for their employees.
On the other side of the coin, dental insurance follows a business model where the company only pays part of the costs of the services to dental clinics. When their customers pay for a yearly premium, they will only pay a lower amount to the clinics, thereby making the insurance company some profit.
More About the Dental Insurance Business
If you’re thinking of starting your own dental insurance business, you are probably wondering if it will be profitable. The definition above has already answered that, but how good will the business be? How safe will it be to have this kind of company? Here are a few facts to help you answer these questions.
There are three categories in dental insurance plans – basic, preventive, and major. The category affects how much a dental insurance company pays for. For example, most dental insurance companies cover 100% of preventive care services. These include the semi-annual check-ups and the annual cleaning. Sometimes, X-rays and sealants are included.
For the basic category, basic services like root canals, fillings, and extractions are co-paid by the insurance company. Usually, the company pays for at least 70% of the price while the patient pays the rest. And for the major procedures like bridges and crowns, you have the opposite. The dental insurance pays for a minimal percentage while the patient pays for the bulk of the service.
You might have wondered about patients taking advantage of the basic services so they will pay a small amount and the insurance company pays for the rest. No need to worry about this one because dental insurances have waiting periods before they actually pay for major or basic procedures. This means that clients will not be able to take advantage of the benefits right after they buy their insurance. As a dental insurance company, this will help increase your profits.
To further emphasize why dental insurance is good business, there are payment methods like deductibles and co-insurance. Deductibles refer to the amount needed to be paid before a dental insurance company pays for a particular service. This means that the patient should pay for a certain amount first before the insurance pays the remainder of the price.
On the other hand, co-insurance refers to splitting the payment between the patient and the insurance company. Depending on the category of the service, the latter can pay just 20% or it can reach up to 80%.
And then there’s coverage. There are many dental services that are expensive. But to make the business profitable, dental insurance rarely covers cosmetic procedures. This includes teeth whitening, gum contouring, and tooth shaping. This is why some people consider dental insurance to be a bit limited. However, for the sake of making good business, the coverage only allows for certain dental services.
If you are considering investing in a dental insurance company, then you should know that most of these companies are able to profit a lot. However, you should also know that some companies have a bad rep because of the cost of getting dental insurance. Nonetheless, there are many ways for how insurance companies thrive. One is by promoting preventive dental plans to people because this lessens the chances of them needing the more expensive dental procedures. So overall, a dental insurance company can make a very profitable business.