AARP Dental Insurance

May 6, 2010 by Jeremiah | 4 Comments

I’m going to look into the AARP Dental Insurance plan. If you saw my article where I just joined the AARP, you know that I saved ½ on my car insurance just by joining AARP. When I retired on October 1st, 2009, I took the whole medical/ dental package, since I didn’t know how my expenses and my medical/dental coverage was going to all work out. So I got the whole package combined.

My dental premiums are banded and based on age. Band or banded is a term that means people are grouped into a rate category by age. Think of the band like a group. The band I am in is for the 51 to 60 years old. The next band goes from 61 to 65. Then from 66 to 70.

My dental premiums are the same as they were when I worked full time. That’s because the company was not paying half for the dental insurance – they were only paying for ½ of the medical. My medical is twice what I used to pay since the company is not paying half like they used to. But I knew that was going to happen.

Other than cleanings every six months, we have not needed any dental work done for the last three years. I pay $1200 a year ($50 every two weeks) for dental premiums and my benefit is $1250 for each of us.

My cleanings cost $37 for a Periodic Oral Eval and $75 for a Prophylaxis-Adult for a total of $112.00. This is paid for 100%. So multiple this by 2 for twice a year and 2 again for the two of us and get $448.

As we get older, maybe we’ll need more work, but the benefit is only $1250 a year. Right now the insurance company has collected $3600 for the last three years and I have received 4 cleanings a year for $448 per year times three or $1344. So I have over paid $2256 ($3,600 – $1,344).

If I had taken that money and put it in the bank and paid for the cleanings out of my pocket, I could have a balance of $2,256. Let’s say one of us needed extensive dental work one year. The plan would only pay $1250 maximum benefit. So if I take $1250 from the $2,256 I am left with $1,006. I could have used that $1,006 to pay the balance of the extensive dental work and maybe still come out ahead.

Insurance is risk sharing. The insurance company is betting you will not need dental work and you pay the premium because $50 per pay check does not sound like a big deal. Heck you probably spend more for lunch twice a week and lattes’.

What is the take away for you? Check your policy to see if you are getting your money’s worth. You might be over paying for coverage. On the other hand, if you are not good at taking the money and stashing it in a credit union or bank account for a rainy day, every paycheck, maybe paying $50 twice a month makes more sense.

For Taking Early Retirement (TER), I hope you are enjoying a great retirement or are close to that day!