How to correctly calculate your dental patients’ out-of-pocket costs

Calculate dental patient out-of-pocket costs accurately so you can give your patients a clear picture of what they owe. You’ll increase their trust in you while improving the flow of your overall revenue. 

Nothing is more helpful to a patient than getting an out-of-pocket estimate for treatment. While this is only an estimate, it still helps dental patients plan their payment to you accordingly — and it leads to faster payment with little to no dispute, which helps your dental team. 

But how exactly do you calculate dental patients’ out-of-pocket costs? We’re here to answer that question for you using realistic examples.

To take it to the next level: Put this knowledge into action paired with DCS automated patient billing solutions to ensure your patient revenue is steady and maximized. 

Key takeaways on dental patients’ out-of-pocket costs: 

• Always remind a patient that their out-of-pocket estimate is just that: An estimate. They are ultimately responsible for the full cost of their dental treatment, no matter how much (or how little) their insurance is willing to cover. 
• Verifying insurance coverage ahead of treatment is your best way to get the most accurate out-of-pocket estimate. 
• Patient billing solutions with online payments make it easy for patients to pay, no matter what their out-of-pocket costs are. 
• A patient billing solution that features customized payment plans will be loved by patients on a budget. 

Why accurate dental patient out-of-pocket calculations are crucial to patient collections

Let’s be real: We all know going to the dentist can be an expensive trip. Even with dental insurance coverage, patients are typically paying 50% of the total cost (depending on the procedure).  

This awareness and sensitivity to their costs is crucial when your dental team is communicating out-of-pocket estimates to your patients — and your team has to get that number as accurate as possible. If their estimate is way off, 'the billing cycle may end in disputes with your patients, which will not only lead to the loss of their trust and goodwill, it could mean you never get the money you’re owed. 

Read more: 3 tips to successfully communicate your patient's dental treatment plan presentation

When your team does properly calculate and communicate a patient’s out-of-pocket costs, your  patients will know how much their treatment costs and what they’re likely to owe you after insurance pays their part. Even if the number isn’t pretty, at least there are no surprises. You’ll keep your patients’ trust and, hopefully, earn their continued loyalty —  and referrals. 

So, how do you calculate a dental patient’s out-of-pocket cost? Here’s how to do it, step by step…

Let’s do a simple calculation of dental patients’ out-of-pocket cost (in-network)

Let’s start with this bare-bones example that does not include complicating factors such as deductibles or downgrades. 

Your insured patient comes into your dental office in need of one filling that costs $100. Their insurance covers 80% of their filling, so the patient is responsible for the remaining 20% of the cost. 

Insurance cost: 

$100 x 80% = $80

Patient responsibility: 

$100 – $80 = $20

Pretty straightforward, right? This is the easiest calculation for insured treatment, but in the next example, we’ll go beyond the basics. 

Now let’s include a deductible in our treatment calculation

A deductible is a fixed amount your patient pays out-of-pocket for dental expenses before coverage from their plan’s benefits will be applied. Most dental plans include a yearly deductible per person and a family deductible.

A deductible is typically only applied to basic or major procedures. It rarely applies to preventative care such as cleanings, evaluations, x-rays, or fluoride treatments. 

So, let’s apply a deductible to our original scenario. In this case, your patient needs a $100 filling, and their plan will cover 80% of the cost after the patient pays $50 out of pocket to meet their deductible. 

The sequence is critical: Insurance will first apply the patient’s $50 deductible to the $100 filling fee, and then cover 80% of the remaining $50. 

A common mistake is applying the insurance coverage to the full cost before subtracting the deductible. But calculating 80% of $100 is inaccurate! Let’s illustrate how a deductible is actually calculated: 

Insurance cost: 

$100 - $50 (deductible paid by patient) = $50

$50 x 80% = $40

Patient responsibility (includes their $50 deductible): 

$100 - $40 = $60

The deductible must be satisfied first. It can be a little complicated to work this out, but when you accurately enter the patient’s insurance information into your practice management software (PMS), it will arrive at an accurate number.

Why do you need to know when your PMS will do the math?

So you can accurately and effectively explain to your patient the amount they’re responsible for during their treatment presentation.

This time, let’s include a downgraded procedure into our scenario

Now we’ll apply a downgrade to our scenario. Let’s say the policy allows insurance to downgrade their payment to a less expensive procedure, such as an alternative to the filling that was used.

This is common, and occurs with most dental plans today for procedures like fillings and crowns. For example, the insurance determines their benefit based on the lower fee for an amalgam (silver-colored) filling although a composite (white-colored) filling was performed on the patient.

When the insurance company decides that a less expensive option would have sufficed, that is all they’ll pay for. In the case of our filling example, insurance companies consider options like a composite filling to be cosmetic, and therefore a patient’s choice and not a medical necessity. These downgrades lower the amount insurance pays you, and increases the patient’s responsibility accordingly. 

So while the doctor performed the composite filling for $100, insurance will calculate their 80% portion using the lower fee for an amalgam filling, which is $70. This downgrade means insurance pays $56 instead of $80 — a $24 savings for them, which is then added to the patient’s costs.

Insurance cost: 

$100 (original fee) - $30 (downgraded difference) = $70

$70 x 80% = $56 

Patient responsibility: 

$100 - $56 = $44

Again, there is an option in your PMS to apply downgrades to certain procedures, and it should properly calculate the patient’s responsibility for you. The trouble is, it’s very common for front desk team members to miscalculate a patient’s bill when downgraded fees apply, and that can impact your dental business’ bottom line. 

Related: What is dental billing? An understanding of how dental billing works

If the lesser benefit is miscalculated or miscommunicated in the treatment presentation, you may find the difference between your fee and the downgrade ends up written off instead of collected from the patient. Multiplied by hundreds of treatments, this adds up to a considerable loss for your business.

You can keep your cash flow by ensuring everyone on your team has access to the proper information and training about how to correctly calculate costs — including downgrades. 

Remember: The patient is always responsible for what isn’t covered by insurance, including the difference in the actual restorative procedure performed and its lower-cost alternative. 

Collect more in less time with more accuracy using automated dental patient billing

Calculating a patient’s out-of-pocket estimates takes time, and it’s prone to error as items like deductibles and downgrades are built in. Your dental team’s time is better spent with your patients, including presenting estimates for their treatment.

Accurate estimates and a confident presentation are crucial to case acceptance and a mutual understanding about their bill —  and in return, you’ll earn every patient’s trust, goodwill, and referrals.

So let us take the routine work off your team’s plates so they can present personalized treatment plans accurately and effectively: Automate your patient billing with DCS.

While your team focuses on your patients, the patient billing software will deliver statements by text or email and accept online payments from any digital device via credit card or digital wallet (Apple Pay, Google Pay, etc). 

No more mailing paper bills, statements, and reminders — or paying for paper, printing, and postage. It’s all handled online from billing to bank deposit, so it’s easy for your patients to use and hands-free for your busy dental team. 

And it’s easy for your dental business to implement, too. You’ll sync it with your PMS, then watch the patient revenue flow in on auto-pilot. 

Read more: Higher dental patient revenue within a week? Let's talk about it

Get automated patient billing that collects for you 24/7/365: Let’s talk about it

To recap, an accurate out-of-pocket estimate is crucial not only for collecting from your patients, but also keeping them happy with your services. And automated patient billing makes patient payments easy for everyone—

Your patients get: 

• Convenient online payments
• More transparency and communication from you
• Multiple payment financing options

Your team gets: 

• Completely hands-free for your team
• Easy to use dashboard with insights and analytics available
• More time to devote to in-office patients

Your dental business gets: 

• Faster and more patient revenue
• Modern, tech-savvy software that puts you ahead of the curve — and ahead of competitors
• A happier, more organized dental team
• Loyal patients for life

These easy benefits are important, because insurance tactics can make things complicated. So, it’s up to you to explain the limitations of each patient’s policy and deliver an accurate estimate so they can plan for treatment accordingly. 

Your team will have more time to calculate out-of-pocket costs when you automate the tedious manual work of patient billing. Instead of wasting time printing and mailing statements and payment reminders, they’ll be presenting thoughtful, accurate treatment presentations to your patients. Meanwhile, billing statements and reminders will be sent out automatically, paid quickly, and deposited to your bank account electronically.

Your patient collections can be transformed within a week: DCS Patient Billing will be set up within just 72 hours, and you’ll see results in just a few days.

DCS offers end-to-end revenue cycle management solutions that streamline your processes and increase your cashflow, from patient scheduling to patient billing. 

To get technology that collects from patients 24/7/365, book a free 30-minute call with one of our experts today.