What Is Dental Indemnity Plans?

updated on November 15, 2023

  • Dental insurance helps cover predictable routine costs like exams and cleanings, as well as unpredictable expensive treatments. Employer-sponsored plans offer perks like subsidies, tax benefits, and pooled risk. While dental insurance can provide valuable financial assistance, the variety of plan options can make choosing coverage confusing. The aim of this article is to explain what indemnity dental insurance is and how it works, so you can determine if this type of plan makes sense for your needs. We’ll provide an overview of indemnity dental plans, how reimbursement and fees work, the pros and cons to consider, and how indemnity compares to other dental insurance options.

    Indemnity dental insurance, also known as traditional dental insurance, is one type of plan to consider. With indemnity plans, you pay a monthly premium and are reimbursed a fixed amount for dental expenses based on what your insurance carrier determines to be “usual, customary, and reasonable” fees. A key benefit is flexibility—you can visit any licensed dentist without a referral. However, out-of-pocket costs may be higher depending on the dentist's fees. Understanding how indemnity dental plans work is important for anyone aiming to offset the expense of dental treatment.

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  • How Indemnity Plans Operate:

    Indemnity dental insurance provides coverage that works differently than other common insurance plans like Dental PPOs and Dental HMOs. With indemnity dental plans, you are not restricted to a network of dentists - this flexibility allows you to visit any licensed dentist you choose without needing a referral.

    Indemnity plans reimburse you for a percentage of your dental expenses, up to a maximum amount deemed "usual and customary" by your insurance company. If your dentist charges more than the usual and customary rate set by your insurer, you are responsible for paying the remainder of the bill out of pocket.

    Like other types of dental insurance, indemnity plans typically involve several key components:

    • An annual deductible, which is the amount you must pay out-of-pocket before your insurance coverage kicks in. For example, if your deductible is $75, you would need to pay the first $75 of dental expenses before insurance starts covering a percentage of costs.

    • Monthly or yearly premiums that must be paid to keep your policy active. Premiums for indemnity dental plans often range from $400 to $700 annually.

    • An annual maximum benefit, which is the total dollar amount your plan will pay toward your dental care per policy year. Common max benefits may be around $1,000-$1,500.

    • Potential waiting periods for major dental work, which means you need to be enrolled for 6 months to a year before coverage for crowns, bridges, dentures and other major services starts.

    Indemnity plans provide a percentage of coverage for preventive, basic, and major dental services. Covered services typically include:

    • Preventive: oral exams, cleanings, x-rays.

    • Basic: fillings, tooth extractions, some simple oral surgery.

    • Major: crowns, bridges, dentures, dental implants, root canals.

  • Weighing the Pros and Cons:

    When weighing whether to enroll in a dental indemnity plan, there are some key advantages and potential drawbacks to consider.

    One of the biggest pros of indemnity dental coverage is the flexibility it provides in choosing any dentist you want. You are not restricted to a limited network of providers. This appeals to many insurance shoppers who wish to continue seeing their current, trusted dentist. Indemnity plans also allow you to directly access specialists like orthodontists or oral surgeons without needing referrals from a primary care dentist. This freedom and flexibility is a major benefit for those who value having options in who provides their dental care.

  • However, with increased choice comes some potential trade-offs. Premiums for indemnity dental plans tend to be higher compared to other insurance options like Dental HMOs and Dental PPOs. So you'll want to factor the monthly or yearly costs into your decision. Indemnity plans also set maximum allowances that they will cover for each procedure, based on what is deemed the "usual, customary, and reasonable" rate. If your dentist's fees exceed that amount, you'll be responsible for paying the remainder. These plans also commonly have an annual maximum benefit, after which you must pay all remaining costs for the year. Being aware of out-of-pocket expenses is important.

    As we've discussed, indemnity dental plans provide coverage that differs from dental HMOs and PPOs in several key ways. Speaking with your dentist on typical costs and clearly understanding annual maximums, deductibles, and reimbursement levels is key to picking coverage that fits your dental and financial needs.

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