Episode #343: What Percentage of Patients Use Their Dental Insurance Benefits?

Gary Takacs: Yeah, this is an interesting question. Let me tell you where the answer comes from. I discovered an association recently when I was doing some research that I had absolutely no idea even existed. Uh, Naren, have you ever heard of the National Association of Dental Insurance Plans?

Naren Arulrajah: No.

Gary Takacs: No, neither did I. However, there is such a thing, and as I did my research, I understand that as far as ex-insurance executives go, this is their association — kind of like the ADA, the American Dental Association, is the association for practicing dentists. Well, apparently this is the association for the executives in insurance companies.

And so they published some, um, uh, research recently about the utilization of the annual maximum. Now, let’s talk about the annual maximum for just a minute. So, typically what we see today in terms of annual max — in other words, insurance plans, unlike healthcare plans, will have an annual maximum. In other words, they’ll provide only up to this amount per year.

And sadly, that annual maximum hasn’t changed all that much since insurance first came into being. Dental insurance came into being in the 1960s. Now, let’s look at, say, 1968. That’s about when we started to see insurance more utilized. What do you think the annual benefit was? In other words, covered by a plan — how much you get each year if you used it all — what do you think it was in 1968?

Naren Arulrajah: I think it was around a thousand dollars.

Gary Takacs: It was a thousand dollars. Yeah, you got it. It was a thousand dollars. Mm-hmm. But let’s look at what a thousand dollars bought. A crown in 1969, again according to my research, was $150 on average, and it was covered at 50%, just like it is today. So that meant for a crown, the patient pays $75 and the insurance company pays $75. And that $75 the insurance company pays goes against the annual benefit—the maximum benefit.

So how many crowns could a patient get in 1968? I’ll do the math for you, Naren. It’s between 13 and 14. Thirteen and fourteen. If, you know, your crown fee was $150, you could get between 13 and 14 crowns. That’s not a full mouth reconstruction, but if you did some of the crowns in November and December, and then you did the remaining in January and February, you could essentially get a full mouth reconstruction done.

Gary Takacs: In two years’ worth of insurance benefits. Wow. Today, Naren, fast forward to 2025, which is the time we’re recording this—there are many dental insurance plans that still have a thousand-dollar annual max. It’s the same thousand dollars.

Now, sometimes it’s better than that. We see plans today at $1,200. I’ve seen some at $1,250—$1,250. I’ve seen some at $1,500. Now we’re starting to get into the outlier category—not many in that category. And then occasionally, we’ll see some more than $1,500. But the majority of them still fall in the $1,000 to $1,200 range every year.

Naren, is that your experience?

Naren Arulrajah: That is, that is my experience, Gary. Yes. I mean, the unfortunate thing is, if I were to just, say, sum it up in one sentence — the cost of living has literally gone up six times, seven times in those 40, 50 years. But the payout, the maximum payout you get from the insurance company as a patient is still pretty much the same, you know, versus—

Gary Takacs: So what is that thousand dollars or $1,200 annual? How many crowns? Remember, we talked about in 1968, they got 13 to 14 crowns. Yeah. How many do they get now?

Naren Arulrajah: Not even one.

Gary Takacs: Well, one, if it doesn’t need a root canal. Yeah, if it needs a root canal, now we’re over the limit.

Naren Arulrajah: Yeah. So, I mean, this is why you have "tooth dentistry," right? Like, they can only do one tooth at a time and, uh, you know, just barely keep people, you know, like with cleanings. That’s it. Like anything more than cleanings — it’s like a luxury nowadays.

Gary Takacs: Well, and I actually think that, um, a lot of patients that have this dental insurance think, you know, “My employer gave me nothing. This is nothing. You know, this is garbage,” regarding their insurance. If it only covers one tooth, you know, it’s garbage. That’s the way a lot of consumers think about it.

But meanwhile, you know, who’s making all the money? Well, the dental insurance companies are. Exactly. ‘Cause here’s the data. I’m going to answer the question: What percentage of patients who have dental insurance use their annual maximum benefit?

Naren, I think you’ll be blown away, as well as I think our listeners will be blown away. If I was to tell you the answer, according to the National Association of Dental Insurance Plans, it’s 2.8%.

Naren Arulrajah: I know.

Gary Takacs: 2.8% of people that have dental insurance use their annual maximum. Isn’t that crazy? I would’ve thought that number would’ve been much higher.

Naren Arulrajah: Yeah, I bet that’s a number that they optimize for. They want the number to be as low as possible — as insurance companies.

Gary Takacs: That’s why they’re not going to raise their annual limit. Yeah. Why would they? Why would they need to? When they say, “Wait a minute, let’s round 2.8 to 3%. Ninety-seven percent of people don’t use it. Why do we need to raise it?”

Naren Arulrajah: Exactly. That’s the argument. But they make it so hard, which is why people don’t use it. Like, there’s 300 qualifications and 400—

Gary Takacs: —Well, exclusions. Exactly. Like, you know, the one that really bothers me is the six-month wait between the hygiene appointments. So if your patient comes in — your good patient, one who’s being faithful — and they come in five months and 29 days after their last hygiene appointment, that claim will be denied. Will be bounced and denied because it didn’t meet the six-month wait.

So, the sad reality is that 97% of people that have dental insurance don’t use the maximum benefit that they have. Now, if they don’t have needs — let’s say they’re in good shape and they come in twice a year and get their teeth cleaned — that’s fine. That’s great. But in reality, I think a lot of the time they do have needs, and they’re either not going to the dentist, or the fact that there’s such a significant copayment, they really feel like the dental insurance isn’t helping them at all.

Gary Takacs: Which really leads me to the point of this podcast interview. I think when people come to the dentist because they have insurance — when they’re brought to an office because they have insurance — what they really want is free dentistry.

Yes. They want that free cleaning. You know, and that’s one of the reasons… now, some of you might have to take a leap of faith to believe what I’m about to say, but I think if you think about it, you’ll believe it.

Why are cancellations so high for hygiene appointments? They’re higher with people — I have the data on this — the cancellation rate is higher, the cancellation or no-show rate is higher, with patients that have insurance than those that don’t have insurance.

What does that say to you? What does that data point say to you, Naren? You’re a data guy. What does that say to you?

Naren Arulrajah: Uh, it tells me that those with dental insurance, um, don’t value it because—

Gary Takacs: —Don’t value you. It’s free. It’s free.

Naren Arulrajah: Yeah. It’s free. We don’t value things that are given to us for free. Even a child — I mean, like two kids — one kid, you pay for everything, right? Like their school, their tuition, their living, room and board. The other one has to work hard and pay the tuition. And usually, the one who works hard values everything, right? Like they—

Gary Takacs: —Value it. Yeah. And so the reality is that they have this thing called dental insurance. They’re tricked into thinking it’s a good thing. 2.8% of ’em actually use it — you know, to the, those lousy maximums.

Yeah. You know, Naren, if you had — think about this for a minute, you like math, I think you’ll like this — you know, the million-dollar practice is still, for some, considered to be the aspirational goal, you know, to create a million-dollar practice.

If you had a thousand patients in your practice and all of them used the annual benefit — let’s say they had a thousand-dollar annual award and they used their annual benefit — that’s all you’d need to have a million-dollar practice, right? A thousand times a thousand is a million.

Gary Takacs: Right?

Right. But it doesn’t play out that way because only 2.8% of them are gonna actually use their annual maximum. And that’s because they don’t really value it. They don’t really value it.

Right. So I think this calls into question, you know, how does participating with PPO plans really build your practice? And I would politely say that it works against you to build your practice, because you’re attracting people that really don’t value what it is that you’re providing. Mm-hmm.

And they’re not likely to accept elective treatment. Because how do we know that? Because when you present elective treatment, what’s the question that comes out of the patient’s mouth?

Naren Arulrajah: Is it covered by insurance?

Gary Takacs: Covered by my insurance? When your answer is, “No, they don’t cover this,” — Oh, oh, I’m out, I’m out.

And is that any way to build a practice? I mean, do you want that type of, uh, um — you know, we use the term "patient" — but would you like that type of customer in your business that doesn’t really value what it is that you provide? Not really.

So, some things to think about. But let’s come back to that 2.8%. I think one of the things we can do is we can do a better job of raising that number internally in your practice. Do you think we could do that, Naren? You think there’s things we could do to get people to use their annual award?

Right? We can. And we can. Mm-hmm. Don’t just ignore it. Like, for example, we can send that end-of-the-year insurance letter.

Gary Takacs: Yeah. You know, use it or lose it. Right? Universally, when people get that use it or lose it message, it says — although treatment is never determined by insurance — however, if you do have a need and you have benefits, you may want to get in before the end of the year. Because when the clock strikes midnight on December 31st, when the ball drops down from Times Square, if you haven’t used those benefits, they do not carry over. They go back to the fat cats at the insurance company. Right?

There’s something else you could do. Think about your practice and think about the age distribution of your practice. Many practices today have a very diverse age distribution.

For example, I’m thinking of a client — just this morning I had a, he’s a client of Thriving Dentist Coaching — and I asked him, I said, “Hey, what’s the youngest patient in your practice?” And he said, “Two years old.” He said, “We do see kids. We’re not a pediatric practice, but we do see kids, and we recommend a first visit at two years old.”

I said, “What’s the oldest patient in your practice?” He said, “Oh, I know that one because I just saw him last week — he’s 97. Ninety-seven.”

So look at the age distribution: two to ninety-seven. Now, that may not be typical for everyone, but that’s not uncommon — to see that diversity of ages.

So if you have silver-haired or no-haired patients that are, you know, older — maybe they’re in their late fifties or sixties — a lot of times these patients will talk to you about, “Oh, I’m counting down the days — only three more years ‘til I’m retired.”

Gary Takacs: You know, can you imagine that conversation coming up, Naren, in a relationship-driven practice? Can you imagine?

Naren Arulrajah: Yeah, absolutely. Yeah. Yeah. A hundred percent.

Gary Takacs: “Hey Doc, I’m counting down — only three more years.” You know, I think we can identify our senior patients. We know if they’re working because we have their records. And we can say to those patients:

"You know, George, I’m kind of celebrating with you. I’m counting down with you to your retirement. And I hope these last work years go really well for you. But one of the things we should talk about is taking a look at what’s going on in your mouth while you still have dental insurance. Maybe we can proactively plan some treatment to get you as healthy as possible before you retire."

Because most people, once they retire, they don’t have dental insurance benefits. Now, can you imagine that conversation landing well with patients?

Naren Arulrajah: Yes. Absolutely.

Gary Takacs: Absolutely. Yeah. And again, we’re not saying we’re doing treatment because it’s covered by insurance. We’re saying, “While you have these benefits, let’s do some planning.” We might take some records and proactively solve some things for them while they—

Naren Arulrajah: Yeah. I think the way to think about it, if you’re a practice owner, is to say, “Here are some free stuff you have — like coupons. Let’s make sure we use those coupons when you do your renovation project.”

But of course, you’re still going to do your renovation project to make you happy — not to make the coupons happy. You know what I mean? Like, you’re going to do what’s necessary for your home, and coupons just help. They are like tools. You know, they just make it a little bit easier on you. That’s all they are. Nothing more, nothing less.

Gary Takacs: The obvious one is the patient that comes in every three years — whether they need it or not — for their cleaning. You know?

Naren Arulrajah: Right, right.

Gary Takacs: You know, tongue-in-cheek about whether they needed it or not, right? We can say, “George, do you know you get two of those visits covered a year?”

“Yeah, you know, do you know that?” And most of the time they do — “Eh, I guess I do know that, but I haven’t really been paying attention to it.”

Well, let’s get you on a regular schedule. You’ve got the benefits — let’s get you on the regular schedule, right? And obviously, that leads to more exams, leads to more treatment, leads to lots of potential. Maybe it leads to a patient that becomes more interested in their oral health.

Closing Thoughts

Gary Takacs: Well, as we wrap this up today — what percentage of patients who have dental insurance use their annual maximum benefit?

The answer is 2.8%. Two point eight. And I think we need to be on a mission to help your patients raise that number. The insurance company executives at the National Association of Dental Insurance won’t like it when that number goes up, but it’s going to help your patients — and that makes it worthwhile.

Well, as we wrap up today’s episode, I want to take a minute and thank all of our listeners. We appreciate each and every one of you here at the Less Insurance Dependence podcast.

You might want to share this. It might be wise to share this episode with some of your colleagues, because I think the data point is really stunning. It was really surprising to me. Feel welcome to share this. We love new listeners.

Feel welcome to share this with your colleagues.

On that note, thank you for the privilege of your time, and Naren and I look forward to connecting with you on the next Less Insurance Dependence podcast.

Your practice can help them get more value and better care.