Comparing Dental Plan Types: PPO vs HMO vs Indemnity vs Discount Plans

Whether as an individual or part of a group, sorting through the different types of dental plans can be confusing.

Once again, Authority Dental is here to help make sense of a potentially confusing subject.

The four basic types of dental plans are:

  • Dental HMO (a.k.a. Capitation, Pre-Paid) Insurance
  • Dental PPO Insurance
  • Dental Indemnity (a.k.a. Traditional, Fee for Service) Insurance
  • Discount Dental Membership Plans (Not Insurance)

There is still variability within each of these types.  But learning a bit about each of them in turn will help to provide the foundation for you to make the right choice.

From a business owner’s perspective, benefits plans use a different set of categories.  If you’re an employer trying to figure out which way you should go, check out:

Here, you will learn everything you need to know to choose between the different types of dental plans.

Let’s start with the most popular type of dental insurance:

HMO

Dental HMOs are a type of managed care insurance plan.

The ultimate in “closed panel” plans, the major selling point of DHMOs is rock bottom pricing.  You can expect the lowest monthly premiums.  You can also expect extremely low (or no) cost on preventative services.

HMOs often provide the lowest out-of-pocket costs of any plan type.  You can also forget about tedious claims processes.  Managed care plans handle that for you.

The low cost and claims management may come with drawbacks though.

Coverage under HMOs is often restricted in many ways.  You have to select a primary care dentist.  All work must be provided by that dentist or a specialist referred by them.  Otherwise, you will not be covered.

HMOs also tend to specialize in preventive and diagnostic dentistry.  You may receive little to no coverage on basic and major procedures.  This leaves the door open for potential “bait and switch” tactics—whether intentional or accidental.

Serious customer service complaints are more common with DHMOs than any other type of dental plan.  They are often accused of being overbooked and understaffed.  Some plans even limit the amount of time dentists can spend with their patients.

Obviously, your experience will depend on the quality of your options.  HMO dental insurance is a great choice for many.  Just take special care to do your due diligence for this type of plan.

Advantages

  • Lowest Premiums
  • Low or No Deductible
  • Low or No CoPayment for Preventive Services
  • No Claims Filing
  • No Waiting Period for Covered Procedures
  • No Annual Maximums (Usually)
  • Most Likely to Cover Orthodontics

Disadvantages

  • Must Select Primary Care Dentist
  • Primary Dentist Acts as Gatekeeper
  • Most Prone to Horror Stories
  • May Have Limited Basic and Major Benefits

PPO

Dental PPOs are another type of managed care insurance plan.

In a lot of ways, DPPOs play the middle between HMOs and indemnity insurance.  This is true of their pricing.  It is also true of their policy structure.

PPO dental plans have aspects of closed and open panel systems.  PPO insurance companies negotiate reduced rates with a network of dentists.  But they also cover out-of-network procedures, albeit with reduced benefits.

All dental coverage is geared towards prevention.  Yet PPOs are more likely than HMOs to offer strong benefits for basic and major services.  On the other hand, you will probably deal with deductibles, annual maximums, and waiting periods.

This insurance plan type probably comes in more forms than any other.  Some networks are huge or share client lists with other networks.  In contrast, EPOs (a PPO subtype) have restrictive networks and may require a primary dentist.

Take time to read the fine print so you know exactly what your PPO plan may or may not cover.

Advantages

  • In and Out of Network Coverage
  • Strong Benefits and Coverage Levels
  • No Claims Filing
  • Less Expensive Premiums than Indemnity
  • More Likely to Cover Orthodontics than Indemnity

Disadvantages

  • Best at Nothing
  • Deductibles (Usually)
  • Annual Maximums (Usually)
  • Waiting Periods for Some Procedures (Usually)
  • More Costly Preventive Coinsurance than HMO

Indemnity

Dental indemnity plans are fully “open panel”, fee for service insurance.

Policyholders file a claim for reimbursement once the procedure has been completed.  This gives them the freedom to select any dental care provider they like.

Indemnity plans usually offer a wide range of coverage, at high levels.  Compared to PPOs, you’re more likely to have a low deductible.  You’re also more likely to find a plan with no annual limits.  Orthodontics benefits are the least common because these plans usually aren’t made for families.

The main function of indemnity insurance in the current market is to support fee for services dentists.  These are dentists who are not in a network and therefore charge full price to all patients.

A dental indemnity plan is sometimes the only way to keep a dentist you’re used to.  Those in location limbo may also benefit from an indemnity plan.  Lastly, this type of plan may be the best place to look for the premium benefits you want.

Advantages

  • Visit Any Dental Care Provider
  • Strong Benefits and Coverage Levels
  • Less Expensive Deductibles than PPO
  • Higher Annual Maximums than PPO (Usually)

Disavantages

  • Highest Premiums
  • Deductibles (Usually)
  • Annual Maximums (Usually)
  • Waiting Periods for Some Procedures (Usually)
  • More Costly Preventive Coinsurance than HMO
  • Least Likely to Coverage Orthodontics

Dental Discount

Discount dental plans give members access to a referral network of dental providers who have agreed to reduce their rates by 10-60%.

This type of dental plan is not insurance.  Instead of the managed care or traditional model, members pay out of pocket.  Being a part of the plan reduces those out of pocket fees.  There is no claims reimbursement process.

This type of plan is the simplest on the consumer side.  Members usually receive a card that can be shown to participating dental providers.  Show the card; get a discount.

There are generally no hidden fees or confusion over costs.  You don’t have to worry about things like deductibles, annual maximums, or waiting periods.  Your only charges are your membership fee and your discounted procedural costs.

Discount dental membership also give you a great deal of flexibility because you can shop plans that are most relevant to you.  Determine the procedures you may need and narrow your search to focus on what is important to you.

Discount dental memberships can save you money as a stand alone plan.  But they also work great as temporary options or as supplements to insurance.

Advantages

  • Simplest Dental Benefits Plans
  • Don’t Pay for Unneeded Coverage
  • No Deductibles
  • No Annual Maximums
  • No Waiting Periods
  • No Claims Filing
  • Works Well with Other Plan Types

Disavantages

  • May Have Limited Availability Near You
  • May Have Limited Provider Network
  • Never Eliminates Out-of-Pocket Costs

Beyond the Types

As you can see, there are many routes to take when it comes to dental health coverage.

Instead of getting lost in the options, we suggest identifying your needs first.  Then shop the options tailored to those needs.  This is the only way to strike the right balance of benefits and cost.

For you, budget may be non-negotiable.  Or, you may need the flexibility to see different providers.  And for some, extra benefits for orthodontic, tooth replacement, or other specifics may be the most important.

The number of people under the policy and their age may also help determine priorities.

In the end, there is a lot of overlap between dental plan types.  Plus, industry standards are relatively lose about how plans are named.  This means that you need to base your decision on more than plan type.

Whatever type (or types) of coverage you are interested in, be sure to examine the policy details.

With a thorough understanding of the types of dental plans available, you’re one step closer to choosing the right coverage.

After all, educated buying decisions are almost always better buying decisions.

When it comes to the health of you and your family, it is important to make the right choices. Hopefully, we’ve helped you do just that.

If you need clarification on anything, please leave your comments below.  We also welcome feedback of all kinds.  And please like and share if you know others who could benefit from better dental health.