Dental, vision, and specified-disease policies

Three narrow policies, one big idea

Dental, vision and specified-disease policies are limited-benefit coverages. Each pays for one defined slice of health care and nothing else. None of them replaces a comprehensive major medical plan; each sits alongside one. On the exam, the most common trap is treating one of these as if it were broad health coverage.

Three side-by-side boxes sit on top of one wide base. The first box, Dental, lists preventive care paid at about 100 percent, basic care at about 80 percent, and major care at about 50 percent, notes that an annual maximum caps what the plan pays, and mentions waiting periods. The second box, Vision, lists a routine eye exam, lenses, frames and contacts, frequency limits and dollar allowances, and states that it does not cover eye disease or injury, which belongs to the medical plan. The third box, Specified disease, says its core benefits are triggered by named diseases such as cancer, pays as a lump sum, per day, or per treatment, and pays regardless of other insurance. Lines run down from each box to the base, labelled Comprehensive major medical, with the note that these three policies are supplements, not substitutes. — Dental, vision and specified-disease policies each cover one narrow slice on top of major medical.

Dental insurance

Dental coverage pays for care of the teeth and gums. Most plans group services into three tiers, and the plan pays a smaller share as the work gets more expensive:

Preventive (cleanings, routine exams, X-rays): commonly paid at or near 100%, often with no deductible, because catching problems early saves the insurer money.
Basic (fillings, simple extractions, often root canals): commonly around 80% after the deductible.
Major (crowns, bridges, dentures): commonly around 50% after the deductible.

Other standard features:

An annual maximum caps what the plan pays per person per year. This is the reverse of major medical, which caps what you pay.
Waiting periods often apply to basic and major work, to stop people buying coverage only when they already need a crown.
Orthodontia, when covered, usually has its own lifetime maximum.
A missing tooth clause may exclude replacing a tooth lost before coverage began.
A predetermination (pre-treatment estimate) tells the patient what the plan will pay before expensive work starts.

Dental plans come in three common designs. An indemnity plan pays toward any dentist, either from a fixed schedule of dollar amounts or on a reasonable-and-customary basis. A dental PPO pays more when you use network dentists. A dental HMO (prepaid plan) pays its dentists a set fee per member, called capitation, and you must use the assigned dentist.

Vision insurance

Vision coverage pays for routine eye care: a periodic eye exam and corrective materials such as lenses, frames or contact lenses. Benefits are usually limited by frequency (for example, one exam every 12 months, frames every 24 months) and by dollar allowances for frames or contacts. Vision insurance does not cover medical treatment of eye disease or injury, such as glaucoma or an eye wound. That care belongs to the medical plan.

Specified-disease insurance

A specified-disease policy, sometimes called dread disease insurance, pays its core benefits when the insured is diagnosed with a disease named in the policy. Cancer policies are the classic example. Some cancer policies also add a small screening benefit, but that extra does not define the coverage. Benefits are typically a lump sum on diagnosis, a fixed amount per day in the hospital, or a schedule of amounts per treatment, and they are paid regardless of any other insurance the person has. Most policies exclude a disease diagnosed before coverage began, and many apply a short waiting period before a diagnosis counts.

A specified-disease policy pays nothing for any illness that is not on its list, no matter how serious.

Because these policies are so narrow, regulators watch them closely. State law lets the insurance regulator set minimum standards for accident and health policies, including standards meant to eliminate coverage so limited in scope that it has no substantial economic value to the buyer. A producer must present these products as supplements, never as substitutes for comprehensive coverage.