What is a Dental Insurance Annual Maximum

The total amount paid by a dental benefits provider as per your dental plan within a period of 12-months for your dental care is termed as Dental Insurance Annual Maximum. In simple words, it’s the maximum amount that your dental plan pays for your dental care in a plan year. The one year period is called a benefit period. 

The annual limit is not just placed on the dollar amount. Sometimes, it may be placed on particular services such as prescriptions or hospitalization. So, it may be a cap on the dollar amount of covered services or the number of visits for a particular service covered in the insurance plan. Once the annual limit is reached, you would need to pay for the dental services you take for the rest of the year. 

Sometimes, Dental Insurance Annual Maximum is also called plan maximum or annual benefit maximum. The 12-month benefit period can start at any point in a year. Generally, a dental insurance annual maximum can range from $750 to $1500 or $1000 to $2000.

Let’s understand the concept of the annual maximum with an example. Assume that your dental plan’s annual maximum is $1000. Your plan will pay for the dental services you receive in the benefit period until it reaches its maximum limit i.e. $1000. Once it reaches its maximum limit, the dental plan resets back to the maximum amount at the beginning of the next benefit period. 

An interesting fact about the annual maximum is that most people never reach their dental insurance annual maximum in the benefit period. As per the National Association of Dental Plans, more than 97% of people on a PPO or DPPO plan (Dental Preferred Provider Organization plan) do not reach their dental insurance annual maximum. 

Note: The annual maximum is usually confused with the term “out-of-pocket maximum” which means the maximum amount paid by you, the dental services receiver, in a benefit period or plan year. 

How Dental Insurance Annual Maximum works?

Before understanding how annual maximum works, you should know the following points:

• The annual maximum does not include your deductible.
• If there are any copays on your dental plan, they don’t apply to the annual maximum.
• After your deductible and copay are satisfied, the remaining cost is applied to your annual maximum.

Now, let’s take a look at the following example to understand how the annual maximum works. 

• Let’s assume that your plan has an annual maximum of $1000.
  
• Now, at the beginning of your benefit period, you realize that you need to get a root canal or your dentist suggests one and it will cost you around $500. You learn that your dental plan covers root canals at 80%, which means that your plan will pay $400. This amount will be deducted from your annual maximum. Now, the remaining balance you have for the year or benefit period is $600.
• After a few months, you get to know that you need a cavity filling and the cost for the treatment is $100. As per your dental plan, fillings are covered at 70%. Your dental plan will pay $70 for the procedure, and the same amount will be deducted from your annual maximum. Now, the remaining balance for the year is $530. 
• You can use the remaining amount for any other dental treatment that your plan covers in the benefit period. However, you will be liable to pay for any dental treatment that you take after reaching your annual maximum in a particular benefit period.
• Remember, the amount you do not use or spend in a benefit period is not carried over to the next benefit period. You get a new annual maximum at the beginning of each benefit period.  
• Your annual maximum will reset back to $1000 at the end of the benefit period.

Good to Know points:

• Two types of dental coverage do not have annual maximums – Dental Health Maintenance Organizations (DHMO) and discount dental plans (DDPs).
• DHMOs are prepaid dental plans. You need to pay monthly premiums for these plans and in return, you receive dental treatment at no or minimal costs.
• Under Discount dental plans, you get discounted rates at the dentist for an annual fee. 
• Both DHMOs and DDPs are not insurance plans. Patients can use only in-network dentists under DHMOs and DDPs.

You can either take coverage from your employer or purchase a dental plan as per your budget and requirement. However, if you are someone who wants to avoid the headache of annual maximums, you are most likely to settle for a DHMO plan or a discount dental plan as you would have limited choices.

You should also be aware of the fact that, in most cases, the annual maximum is often sufficient to cover the dental care you need in a year. However, it’s a good idea to talk to your dentist if you are worried about your annual maximums. Get an idea about the costs when scheduling for dental treatment and make your dentist aware of your annual maximum. Your dentist is likely to come up with a treatment plan that fits comfortably in your annual maximum without compromising on your dental care.