Why dental insurance is a bad investment

I help a lot of people with medical insurance, and at some point near the end of the process, they usually ask, “What about dental?” My answer: “Not worth it.”

Here’s why: the typical individual premium for a dental PPO runs about $40/month, or almost $500/ year. Now, if you’ve experienced dental bills of $2,500 and more, that might not seem too bad. But here’s the catch: dental PPO’s typically pay out a maximum of $1,000 in benefits per year. That’s right – you will pay $500 in premiums every year, for a maximum benefit of $1,000. Ouch.

Hang on, though. There are four viable strategies to make your dental care affordable.

1. Use funds from your Health Savings Account. If you have an HSA-compatible health plan, the IRS lets you set up a tax-advantaged bank account. Ditch the dental insurance and put the $500 you’ll save annually into your HSA. If you combine the federal income tax savings with the 5-10% discount your dentist will give you for paying up front from your HSA, you’ll get all your dental care for 25-40% off. Not bad. Don’t have an HSA-compatible health plan? Call us, or click here for instant quotes (you can filter results to only show HSA-compatible options).
2. Get your employer to pay for it. Small businesses have access to a far wider range of quality dental plans. The $1,000 annual benefit limit can be increased to $1,500 or more. Employers can even set up a voluntary plan, which costs them nothing. Employees get access to much higher-quality plan options, and their premium contributions come out of their paychecks pre-tax.
3. $25 or less. Health Net and Kaiser both offer good PPO dental plans at a lower cost to their health plan subscribers. At about $25/month, you will receive that value back if you typically get your two checkups/cleanings per year.
4. Have a lot of kids. The family rate for dental plans is typically around $120/month. If your family is four or more, you’ll get good value from the coverage.