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The Difference Between Medical Insurance Maximums and Dental Insurance Maximums (What I Learned The HARD Way)

This post is about how medical insurance “maximums” and dental insurance “maximums” can differ, and what that means for YOUR costs. Before we begin that, let’s be clear: I’m not a doctor, dentist, or insurance professional. I’m someone with a big interest in personal finance and helping others learn too. This is based on U.S. insurance systems only, as well as my personal experience. Okay, now onto how different medical insurance maximums and dental insurance maximums can be.

Medical Out of Pocket Maximum: The Maximum Amount YOU Pay in a Year vs.

Dental Coverage Annual Maximum: The Maximum Amount INSURANCE Pays in a Year

If you didn’t know, I had an accident back in March that resulted in a broken jaw (in 3 places) a broken cheekbone, and 4 broken teeth. When the accident occurred, I knew the costs would be big, but felt some comfort that we have/had an HSA (health savings account) with a decent balance built up. I assumed we would hit the “maximums” for both medical and dental insurance……but what I didn’t understand was the VERY important difference between what these two maximums meant. 

I’d never paid much attention to our dental coverage prior because we’ve never needed any major dental work until this. I looked through our policy and saw the words, “individual annual maximum $1500/year,” and WRONGLY assumed that this meant WE would owe no more than $1500 per year. We’ll get to that. Because with medical insurance, the “out of pocket maximum” for in-network is a set number. In our case that number for the family is $14,000 per year. Yes, that’s very high. We have a High Deductible Health Plan (HDHP). However, I’ve always found it reassuring that if we had a major medical expense, the cost wouldn’t be MORE than $14,000 if in-network. So I was pleasantly (and wrongly) surprised to see that our dental coverage showed a $1500/year maximum. So I assumed that would put our total medical and costs for the year (my accident plus all our other medical costs as a family) at $15,500. The $14,000 medical maximum plus the $1,500 dental “maximum”……However I was totally wrong because of the difference.

When I got to the dentist, I’d already been through two surgeries and two months of having my jaw wired shut. I arrived with my half-cracked front four teeth and a jaw that doesn’t open more than halfway. I knew it meant a future of dental work. And sure enough it did. I received a quote that was well beyond $1500 after insurance, and I asked the office admin who went through the quote about this. I told her I had insurance so I was confused by the costs and asked her to walk me through them (always advocate for yourself here and request explanations, even if it’s uncomfortable). She explained to me that my $1500/year maximum was actually the maximum amount my dental INSURANCE would pay out. What?! That changed everything, and we would’ve been in financial ruin if our medical insurance had been set up that way. Here’s a chart that would explain some different scenarios, and how the bill could REALLY escalate with dental costs, even at an in-network provider. I did further research into dental insurance in our area, and this was true for each one I looked into. Both of these assume that you are at an in-network provider (this will vary based on your insurance and your insurance should let you know who is in-network vs out-of-network. The irony is that I switched providers so it would be in-network! *Sigh* but here is the comparison.

This assumes both are at in-network providers. This example is in the US healthcare system with a High Deductible Health Plan (HDHP) and a Health Savings Account (HSA) Option. This example also assumes that no other medicalor dental bills have been paid that same year.

So what does that mean? For us, a much bigger dental bill than expected, though thankfully not into the five figures. For us, the immediate takeaway was that we needed to max out our HSA this year and every year from now on. That means contributing the full $7,100 in 2020 (read more below for the contribution limits) This was the first year since starting our jobs that we HADN’T done this because we’d been covered. 


What should YOU do? Your takeaway if you also have a HDHP with HSA and Dental Insurance.....

1. Check Your Dental Insurance Coverage
2. Understand how much your dental insurance would cover, and what you would owe. Ask specific questions to your insurance company and keep records of the communication.
3. Check Your HSA Balance and understand what that would mean if you had a dental injury or medical injury
4. If You're Able, Up Your HSA Contributions to the Max Contribution Limit*

*Maximum HSA contributions in 2020 are $3,550 for individuals and $7,100 for families. So we are now doing the full $7,100 for the year and will continue to do so each year. I would encourage any family that can prioritize that financially to do so.

You can read further about HSA and FSA contributions on the IRS website here. 

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