Affordable dental insurance pays more in claims than it takes in premiums – after tax consequences.
Dental plans do not work like most types of insurance. They often contain annual limits and do not protect your finances from expensive catastrophic losses.
Therefore, the benefits paid each year must outweigh the premium cost to be worth it.
Financing programs are often a more reasonable alternative. They allow patients to pay the dentist without insurance. There is no need to research costs, project claim payments, and factor in tax deductions.
How Much Does Dental Insurance Cost?
Asking how much dental insurance costs cannot determine affordability by itself. The premiums are only half the equation – plus some people do not need coverage.
- Private health insurance covers medically necessary oral care
- Medicaid covers dental work for low-income families in many states
- Financial assistance programs allow free or low-cost treatment for some
The companies design the coverage so that premiums exceed claims across all policyholders. Therefore, only a small percentage of customers find the coverage valuable – those needing covered treatments.
What Does Dental Insurance Cover?
Including the projected dental insurance benefits allows you to predict affordability. People who generate the most claims find that buying a plan is worthwhile. Consult your policy document for details about covered procedures.
- Seniors often have ongoing oral care needs
- Families with many children have more cavities
- People with unhealthy teeth and gums
Coverage without waiting periods for major services is very rare. This affects the value equation. Patients with pre-existing conditions should not expect to receive any benefits right away.
Annual maximums limit the amount the plan will pay out in claims each year. This common feature makes them operate more like pre-paid oral care programs than insurance.
Possible tax consequences wind up being the deciding value factor for many families.
Is Dental Insurance Tax Deductible?
Dental insurance premiums are tax deductible per IRS guidelines. The potential reduction can possibly lower the effective cost and make a purchase affordable and worthwhile.
However, not everyone qualifies to keep more of their money!
Some people will see first dollar tax savings. On the other hand, others must first meet a threshold based on a percentage of Adjusted Gross Income (AGI). They see reductions only on the amount of unreimbursed medical and dental expenses above this figure – if they reach it.
First Dollar Savings
- Paying premiums via pretax payroll deductions for work-based policies yield first-dollar savings for most people (except for some highly compensated employees).
- Self-employed business owners can deduct the premiums on form 1040 and realize first-dollar savings.
After Meeting Threshold
People deducting dental insurance premiums via Schedule A must first meet a threshold before qualifying to reduce income subject to taxation. They can deduct unreimbursed expenses above this figure.
- 2018: 7.5%
- 2019 and later: 10%