What is the admin tax in dental insurance?

The hidden cost of collecting insurance payments. 45 minutes fighting a $150 claim at $25/hour staff cost = you only made $120 before overhead.

Why do insurance companies make claims so difficult?

Friction saves them money. Every hour your team spends on hold is profit transferred from your pocket to the insurer.

Threshold Rule: If a plan requires 2+ hours admin per patient per year with low reimbursement, drop it. You're paying to work.

You look at your P&L and see "Insurance Write-Offs."

But there is a ghost line item you aren't tracking: "Cost of Collection."

If you pay a human to sit on hold, fax records, and appeal denials just to get paid, you are paying a "Tax" fee-for-service offices don't pay.

Imagine you run a pizza shop. A pizza costs $20.

A customer says: "I'll pay $20, but first your cashier has to fill out a 10-page form, mail it to my headquarters, and call in 30 days to remind me."

Your cashier spends 30 minutes at $15/hour... that pizza cost YOU $7.50 to sell it.

You would ban that customer immediately.

This is PPO Dentistry.

Every claim requiring manual intervention is a "Pizza Form."

You are paying your Front Desk to be a "Professional Form Filler."

This is "Frictional Cost."

Insurance companies design friction intentionally. Friction saves them money.

Every hour your team navigates that friction is profit transferred from your pocket to theirs.

The Threshold Rule:

Calculate your Admin Tax per plan.

If a plan requires 2 hours of admin per patient per year and reimburses poorly... Drop it.

You are literally paying to work.