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 the type of braces worn, 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 allow their pre-tax funds to be used for covering braces. Here’s what you need to know about using your HSA to cover orthodontic care.
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HSAs at a Glance
Insurance is expensive, and most people look for ways to save on it whenever they can. Younger and healthier adults often opt for high-deductible health insurance plans. With these, you pay a lower monthly or yearly premium but have to meet a pretty high deductible before your policy will start to cover treatment.
While this can be a good financial trade-off for many people, it does make it harder to get the healthcare they need when they actually need it. HSAs are meant to bridge the gap.
As a tax-advantaged account, HSAs allow you and your employer to contribute money to be saved for health expenses without needing to pay taxes on those funds. How much you can save per calendar year is set by the IRS and changes from one year to the next. It is important to note that the funds carry over, rather than expiring on December 31st, allowing you to build up your health expense savings over an extended period of time. Also, even though your employer can contribute to the account, your HSA belongs to you. If you change jobs, you do not inherently lose access to the money.
HSAs vs. FSAs: How Are They Different?
If you’ve researched FSAs, you might be thinking that HSAs sound pretty similar. And they are! However, there are some key differences you need to know about.
|How to Qualify||Enroll in a high-deductible health plan.||Be employed by a company offering Flexible Spending Accounts (FSAs).|
|2021 Contribution Limit||$3,600||$2,750|
|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.|
Do HSAs Cover Dental Care?
Yes, you can use your HSA funds to cover expenses related to dental care and orthodontia — but there are limits you need to keep in mind. The main one that impacts dental care is that HSA-covered treatments must be medically necessary. If a dental concern impacts 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 or not your funds can be used 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 and Braces: Are They Covered?
If you are wondering if braces are covered by HSAs, the answer is yes — sometimes. Orthodontic treatment, in general, exists in a gray area of HSA coverage. For those with moderate to severe orthodontic abnormalities, braces are essential medical treatment. For those with minor concerns, they are cosmetic.
Overbites, underbites, severe crowding, and large gaps can all cause dental health and general health problems. For example, if your teeth do not come together properly when chewing, you can place more pressure on one jaw joint than another, causing pain, stiffness, and damage. When correcting the position of your teeth can help heal problems or stop them from developing, you should be able to use your HSA funds to pay for them.
But braces can also be used to close small gaps or correct mild crowding that isn’t causing health problems and likely never will. Generally speaking, this use of braces is considered cosmetic. If you want to make aesthetic corrections rather than medical ones, you might find that you are unable to use your HSA funds to cover treatment.
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 the 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 similar 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.
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 need 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. Take time to 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 or not it is 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 even more later on as those funds are replenished.
How do I reimburse myself for expenses paid out of pocket?
While this can vary between HSA managers, typically, you will either 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 are expected to make the final decision and ensure it is 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 feed on top of that.
How can I find out if my health plan is considered to be "high deductible?"
The parameters of a high-deductible health plan are set by the IRS and can change each year. For 2021, any plan with a deductible of at least $1,400 for an individual or $2,800 for a family qualifies.
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.