With any medical treatment, cost is a major concern. This is especially true with braces. With treatment ranging from $3,000 to $10,000, depending on the complexity of the case and type of braces, few people can afford to pay out of pocket. And unfortunately, insurance doesn’t always cover orthodontic treatment, especially for adults.
Health Savings Accounts (HSAs) offer an alternative solution. By using the funds you’ve already been saving away, you can reduce your financial burden or even pay for your braces in full. Although every HSA establishes its own rules, most let you use their pre-tax funds for braces. Here’s what you need to know about using your HSA to cover orthodontic care.
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HSAs at a Glance
- Require a high-deductible health plan (HDHP). The median deductible for these plans is around $2,000.
- Allow you and your employer to contribute pre-tax wages used specifically for health expenses.
- The IRS determines how much you can contribute each calendar year and changes it from one year to the next.
- The funds carry over, rather than expiring on December 31st, allowing you to build up your health expense savings.
- If you change jobs, you retain access to the money.
- US adults have invested over $100 billion in HSAs as of 2022.
HSAs and Braces: Are They Covered?
In most cases, yes, you can use your HSA to pay for braces and other orthodontic treatments. In fact, braces is one of the specific treatments the IRS lists as an eligible dental treatment.
However, know that cosmetic dentistry isn’t eligible. That primarily applies to things like teeth whitening treatments and veneers. But in very rare cases, it may apply to orthodontics as well. The good news: Braces and clear aligners are often a medical necessity, correcting problems that cause pain, tooth decay, gum disease, and more. As such, you can typically pay for them with an HSA.
Do HSAs Cover Other Dental Care?
Yes, you can use your HSA funds to cover expenses related to dental care and orthodontia — but there are limits. Most importantly, HSA-covered treatments must be medically necessary. If a dental concern affects your health or is considered preventative care, you should be able to use your HSA funds to pay for it.
HSA funds are not meant to be used to cover cosmetic procedures — and many aspects of dental care fall under this umbrella. The problem is that the line between a medical necessity and a cosmetic treatment can be rather thin. With dental and orthodontic treatment, it is always a good idea to contact your HSA administrator to verify whether you can use your funds to pay for your care.
HSA-Covered Dental Procedures
- Braces and aligners (in most cases)
- Sealants and bonding
- Fluoride treatments
- Dental cleanings
- X-rays and scans
- Root canals
HSAs vs. FSAs: How Are They Different?
If you’ve researched Flexible Spending Accounts (FSAs), you might think that HSAs sound pretty similar. And they are! However, there are some key differences you should know.
|How to Qualify||Enroll in a high-deductible health plan.||Be employed by a company offering Flexible Spending Accounts (FSAs).|
|2023 Contribution Limit||$3,850 for an individual, $7,750 for a family||$3,050|
|Contribution Adjustments||Anytime||Only during special or open enrollment periods.|
|Expiration||Funds do not expire.||Funds expire yearly on December 31st.|
|Account Ownership||The insured individual||The employer|
|Using Funds||Applied to cover medical expenses or withdrawn for a 20% penalty.||Generally can only be used to cover medical expenses.|
|Limits on Spending||You can only access what has been contributed but can file for reimbursement once more funds are added to the account.||You can use your FSA based on what you are expected to contribute by the end of the year.|
How to Apply HSA Funds to Cover Treatment
The methods you can use to access your HSA funds can vary between providers, so it is important that you do your research and find out what you need to do before you get treatment. With that said, most offer four options:
- Debit/Benefits Card: Your HSA administrator should have sent you a card that is attached to the funds in your account. You use it just like you would a normal debit card. Keep in mind it only works if you use it with a medical merchant.
- Checks: While these are becoming less common, most HSA managers will send you checks for your account. In some cases, you may need to make a special request for them. Once you have them, you use them like checks for a regular bank account.
- Online Bill Pay: More and more HSA administrators are offering this feature. With this, you go into your online portal and send money directly to your dentist or orthodontist. It works similarly to sending a payment with standard online banking.
- Reimbursement: In some cases, especially when your HSA balance is low, it is best to pay out of pocket, keep a record of the payment, and file for reimbursement later. You can file for reimbursement later on — even years down the road — once your HSA has more funds.
Most medical providers are happy for you to use any HSA payment methods available to you. You just need to decide which is most convenient for you.
What If I Have Dental Insurance, Too?
Not all dental insurance covers orthodontic treatment. If yours does, it might still have limits on what is covered and what percentage your insurer will take on. Be sure to look at differences in coverage for children and teens vs. adults and essential vs. cosmetic treatment.
In most cases, dental insurance will at least cover part of the cost of braces treatment. Expect to pay for at least some of your treatment on your own.
You are allowed to use both your insurance benefits and your HSA funds to cover the cost of braces. Talk to the billing department at your dentist’s or orthodontist’s office to find out ways you can maximize your benefits.
Correcting your tooth alignment can improve your confidence and overall health. But this doesn’t mean you can afford to pay for treatment all on your own. If you have an HSA, you can lower the financial burden of treatment. Combining this with insurance coverage, financing, and payment plans, you should be able to make braces work for you. To learn more, speak with your HSA manager and your medical provider.
Frequently Asked Questions
How do I determine if my alignment issues are medical or cosmetic?
You can’t do this on your own. During your evaluation by your dentist or orthodontist, they will make it clear whether or not your concerns are cosmetic or medical in nature. Once they let you know, check the guidelines for your HSA.
How difficult is it to pay for orthodontic treatment with an HSA?
It’s pretty simple, assuming you are using it to pay for a covered medical expense. You just need to determine which payment method is easiest for you. The hardest part of using your HSA to pay for medical treatment is usually finding out whether it’s covered.
What is the spending limit for using HSA funds to cover braces?
There is no spending limit beyond how much money is currently in your HSA account. If you use all your current funds, that is fine. You can also reimburse yourself later as you replenish the account.
How do I reimburse myself for expenses paid out of pocket?
It can vary between HSA managers, but you’ll typically use your bill pay portal and transfer money into your account or write yourself a check. Keep in mind that you need to document that you paid for medical treatment.
Can I still use my HSA after switching to a new employer?
Absolutely! Your HSA belongs to you, not the company you work for. Assuming you still meet the eligibility requirements for your HSA, you will continue to be able to access the funds.
What if I accidentally use my HSA to pay for treatment that isn't covered?
One of the tricky aspects of HSAs is that you are responsible for making sure your treatment is covered. While others might help, you have to make the final decision and ensure it’s correct. If you end up using your HSA to pay for treatment that doesn’t qualify, you will need to pay taxes on the money used and a 20 percent fee on top of that.
How can I find out if my health plan is considered to be 'high deductible?'
The IRS sets the parameters for high-deductible health plans, and they can change each year. As of January 1st, 2023, that’s $3,850 for an individual and $7,750 for a family.
How do I verify my HSA balance?
In most cases, you do this through the administrator’s online portal, just like you would with online banking with a traditional bank account.
Can my HSA funds pay for my spouse's braces?
Yes, you are allowed to apply your HSA funds to approved treatment for spouses and dependents.