Consumers shopping for dental insurance on the Healthcare.gov will need to be careful while deciphering how cost sharing in the plans actually works. Under the Affordable Care Act, pediatric dental is now one of the essential health benefits that insurers need to include as part of their insurance offerings. For those under 18, dental coverage comes with out-of-pocket maximums that limited the amount policyholders need to contribute towards their dental costs.
This, however, is not the case when it comes to adult coverage. Fewer than 1% of all the health insurance plans on the exchange include adult dental as part of the package, leaving consumers to purchase standalone dental coverage. Adult plans have annual maximums which, despite sounding similar to out-of-pocket maximums, work very differently. The problem is that both the anonymous shopping tool and the actual enrollment functionality of the exchange fail to call out these difference to the consumer, and in some cases label both as out-of-pocket maximums.
Annual Maximum vs Out-Of-Pocket Maximum
All ACA-compliant health insurance policies come with an out-of-pocket maximum that limits the amount a consumer has to spend on their own in each year. A $1,000 out-of-pocket maximum means that once the policyholder has spent $1,000 in copays, deductibles, and coinsurance, the insurer will pick up all additional costs.
In contrast, adult dental insurance both pre- and post-ACA come with an annual maximum, also known as a benefits cap. This instead limits the maximum amount the insurer has to pay in costs. A plan with a $1,000 annual maximum means that once the insurer has paid out $1,000 in benefits, the consumer is responsible for all costs. This is the exact opposite of how the out-of-pocket maximums work.
How Healthcare.gov Fails To Address This
Given the large differences in these limits, it is vital that consumers understand how these limits actually apply to their coverage. Rather than calling out the differences, however, the tools available confuse the two, making it even more difficult for consumers to understand what they're buying. Instead of listing annual maximums, the site often displays the out-of-pocket maximums that would be applied to a child only, even if you're shopping for an adult.
Even we here at ValuePenguin.com were confused as to how the plans worked, and assumed that the on-exchange plans were improving the cost sharing benefits included in the dental plans. Take a look at how the plans are displayed.
These first two images show how plans are displayed in both summary and detailed views on the anonymous shopping tool for an adult. A consumer would be left with the understanding that the most they would ever have to contribute ouf pocket was $700 for either of these plans. In reality, however, the Humana plan has a $1,000 annual maximum for adults that can only be found in the plan brochure.
Enrollment And Plan Selection
Similarly in the actual enrollment and plan selection page, Healthcare.gov again displays out of pocket maximum for an adult consumer. There is a little note that says "Applies to child essential health benefits only" with no explanation of what that means. Again, there is no discussion of the plan's annual maximum and benefits cap. Given that there is plenty of discussion around out-of-pocket maximums as it pertains to health insurance, it would be easy for someone to assume these plans work in the same way.
In its current state, the dental plan functionality does a poor job of calling out how these plans function. Consumers wanting an accurate understanding how much the plans actually cover for adults need to look at the plan brochures themselves.