In a recent discussion, the topic of dental insurance for federal employees and retirees during the open enrollment season came up. The Federal Employees Dental and Vision Insurance Program, or FEDVIP, offers a valuable opportunity for those connected to federal employment to opt into dental and vision plans without the hassle of underwriting or worrying about pre-existing conditions. However, it’s important to note that these plans require employees and retirees to pay the full premium costs, without any contribution from the federal government.
Given that the full premium is covered by the policyholder, it’s advisable for employees and retirees to shop around for other individual dental insurance plans available through various providers. This raises an important question: is any dental insurance plan truly worth its cost?
Much like other forms of insurance, dental insurance is generally procured to transfer financial risk—paying a small, upfront premium to shield oneself from potentially significant dental expenses down the line. While the goal of dental insurance is to avoid burdensome costs that might arise for you or your family, it’s quite different from other insurances, such as health or homeowners insurance, where the stakes of not having coverage tend to be much higher.
Let’s consider a family of four. In a typically uneventful year, routine checks and cleanings might only set them back about $500 to $600 out-of-pocket, for preventive dental care. Many plans under the Federal Employee Health Benefits (FEHB) program cover some of these routine costs. However, if the family spends $700 to $800 annually on dental insurance premiums, they’re essentially at a financial loss when the numbers are crunched.
Even so, retirees might find the investment in dental insurance more worthwhile due to the higher likelihood of needing costly procedures like crowns, dentures, and root canals as they age.
When it comes to navigating those hefty dental bills, FEDVIP provides flexibility. If a federal employee, retiree, or their family foresees major dental expenses, enrolling in FEDVIP during the open season before the new year is crucial. This allows the coverage to kick in from January 1st, enabling them to benefit from the insurance for necessary treatments and then disenroll the following open season as needed.
That said, even with insurance, out-of-pocket costs like coinsurance can’t be ignored. A plan might cover zero percent coinsurance for preventive care but could demand 20 percent or more for treatments like root canals and extractions. For pricier procedures, coinsurance might range from 25 to 50 percent, leaving potentially significant expenses for the policyholder to cover.
Many employees and retirees might want to consider alternatives to group dental insurance like FEDVIP. Exploring individual dental insurance options is wise, often by consulting with a licensed insurance broker to find a plan that suits their—and their family’s—needs. Often, it’s beneficial to choose a plan with a preferred provider organization (PPO) network of dentists. This way, they can save on premiums if their current dentist is in-network or choose a dentist from within the network.
When picking a dental plan, be sure to examine the covered services, deductibles, and cost structure for both in-network and out-of-network providers. As a strategic alternative, some might think of “self-insuring.” This involves setting aside funds directly to cover dental expenses without any insurance plan at all. For instance, using a health care flexible spending account (HCFSA) to save up to $3,300 annually could be beneficial.
As the FEDVIP open season is underway, federal employees and retirees should take this time to assess their dental care needs alongside their family’s for the upcoming year. They’re encouraged to weigh the advantages of FEDVIP against individual insurance options and consider the possibility of self-insuring as an effective financial strategy.
Edward A. Zurndorfer, a seasoned expert in financial planning and federal benefits, provides helpful insights into this discussion, highlighting the need for personalized solutions in managing dental care costs.
