Dear ADA: Annual maximums

Outdated dental plan maximums limit patient care

Dental insurance issues are often rated as one of dentists’ chief challenges.

In response to an ADA Health Policy Institute poll in late 2024, more than half of dentists reported that one of their top concerns looking ahead to 2025 was related to insurance, including low insurance reimbursement rates, denied or delayed payments, and issues related to Medicaid and Medicare.

This ADA News series aims to address some of those challenges. Dear ADA will feature answers to common insurance-related questions the American Dental Association receives from members to help provide clarity and direct members to additional resources.

The answer to this month’s question is provided by Bert Hughes, D.M.D., vice chair of the ADA Council on Dental Benefit Programs.

Dear ADA: My patients often reach their annual dental plan maximums quickly and then struggle to afford the care they need. Many dental plans’ annual maximums have not increased in 50 years. How is the ADA advocating on behalf of dentists?

Dr. Hughes: As dentists, we see firsthand how dental insurance design can support or hinder our ability to provide necessary care. The biggest barriers patients face continue to be plan design elements such as coinsurance and annual maximums, which are imposed by many dental benefit plans. These caps, often unchanged for decades, restrict how much the plan will pay per year, regardless of the patient’s true clinical needs.

In 2024, the ADA adopted a strong and clear policy regarding annual maximums. The Association stated that it does not support annual or lifetime maximums in any dental benefit program and emphasized that out-of-pocket costs remain a major barrier to care.

The ADA also urged dental benefit plan issuers to account for inflation when setting premiums and discouraged multi-year contracts with employers that ignore rising costs of delivering dental treatment. This is an important step toward aligning dental benefits with the real cost of care we provide every day.

While some plans now feature higher annual maximums of $2,000 or more, many still are promoting the long-standing $1,000 level that was established some 40 years ago. These limits have not kept pace with inflation or the rising costs of materials, technology and overall dental care.

The ADA has repeatedly brought this issue to the attention of carriers during multiple meetings, urging them to modernize benefit structures. Insurers, however, often place the responsibility on employers, claiming that employers are not requesting higher maximums.

From the employer perspective, the concern typically centers on premium increases and the belief that only a small percentage of employees ever reach their annual maximums.

What the data shows

The industry is slowly changing. According to the National Association of Dental Plans:

• 32.8% of in-network annual maximums are between $1,000 and $1,500.

• 48.2% fall between $1,500 and $2,500.

• 17.2% are between $2,500 and no annual maximum at all.

Yes, some plans now offer no annual maximum, demonstrating that alternatives are possible.

But a 2024 analysis by the ADA Health Policy Institute shows that only 3.4% of dental patients actually reach the typical annual maximum and another 3.3% come within $100 of common maximums like $1,000 or $1,500. At the same time, Americans’ median emergency savings sit at just $500, according to Empower, leaving many patients financially unprepared for even modest treatment needs.

As patients approach their annual limit, HPI found they incur higher out-of-pocket costs, too. This is not only due to more money being spent but also because they are required to cover a larger share of that spending themselves through coinsurance. In other words, the closer patients get to using their benefits, the more the financial burden shifts to them. Raising annual maximums alone does not eliminate this imbalance.

This problem is amplified by the benefit structure. While the familiar design is 100% coverage for preventive, 80% for basic and 50% for major services, plans have the discretion of placing procedures normally covered at a higher percentage into a lower tier for reimbursement purposes. This shifts more of the cost burden onto the patient. Some plans are even moving major coverage to 20% and including services not typically considered as major into this category.

When a crown is paid at only 50% or less of the insurer’s allowable fee, the patient is responsible for the remaining portion. This is another cost burden for the patient. Many dentists report that patients are declining needed treatment or delaying it until the next plan year when their maximum resets. However, due to the coinsurance design, this is not a real solution for affording care.

The combination of low annual maximums and major procedures covered at only 50% or less creates a perfect storm: Patients face a steep financial burden long before their clinical needs have been met.

What dental practices can do

One effective strategy is encouraging patients to voice their concerns directly to their employer’s human resources department. Employers can increase annual maximums and adjust plan designs, but they often don’t realize the financial burden their employees experience. If they never hear complaints, they assume the status quo is sufficient.

By advising patients to communicate with their human resources teams, especially when the plan design results in treatment delays or high out-of-pocket costs, dentists can help drive meaningful change. Personally, I feel this is the type of discussion I have with my patients on a weekly, if not daily, basis. This especially occurs during the open enrollment period. I have seen some movement by employers after encouraging patients to speak to their human resources departments and some meaningful change after I personally met with the benefits manager for a city in Florida, my home state.

The ADA continues to advocate to the employer community to emphasize the value of oral health and its importance for overall employee health and productivity. It has created a toolkit to help employers understand and evaluate their current or proposed dental benefit plans, available at ADA.org/employerbenefittoolkit.

The ADA has also advocated for implementing medical loss ratio reforms in dental insurance — often referred to as dental loss ratio legislation — ensuring that a higher percentage of premium dollars goes toward patient care rather than profits, marketing or administrative overhead. The Association is working to guarantee that insurance plan designs include transparent reporting requirements as well as prompt refunds to insured individuals when carriers fail to meet minimum payout thresholds.