Choosing to correct your tooth alignment is a big decision, one that can have a major impact on your oral health and self-confidence. It can also have a significant effect on your finances.
Orthodontic treatment ranges from the affordable to the rather expensive — but even on the low end, it’s more than mere pocket change. With costs ranging from $1,145 for at-home aligners from AlignerCo to lingual braces that can cost more than $10,000, you likely need to get creative with how you pay for treatment.
Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are designed to help cover out-of-pocket medical, vision, and dental expenses — with certain limitations. But can you use your HSA or FSA to pay for orthodontic treatment?
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What Are HSAs and FSAs?
HSAs and FSAs are tax-advantaged accounts strictly used to save and pay for qualified medical expenses. Depending on the type of account and the terms set by the administrator, these funds can be used to cover deductibles, copayments, coinsurance, treatments, prescriptions, and even certain over-the-counter health-related products.
These accounts function similarly to a traditional bank account. Most are tied to a debit card and allow you to request checks. Typically, you will have access to an online banking platform. What makes them different is that the funds you can add per year are tightly limited and you can only use your debit card and checks to pay approved medical merchants.
HSAs at a Glance
HSAs are accounts made available to people who have a high-deductible health plan. Each year, the government sets the minimum threshold for what can be considered a high deductible; for 2021, this means at least $1,400 for an individual or $2,800 for a family.
In addition to having a high-deductible health plan, you also must meet the following requirements to have an HSA:
- Have only one insurance plan
- Not be eligible for Medicare or Medicaid
- Not be listed as a dependent on anyone’s tax returns
- Be under the age of 65
You can open an HSA on your own or get one through an employer. The funds added to your HSA roll over from year to year, so if you don’t use all the money in your account in a given year, you’ll still be able to use it later on. The government limits how much money you can contribute each year, and the amount tends to change annually; for 2021, it is $3,600.
HSAs are tax-advantaged, but what that looks like depends on if you open the account on your own or receive it through an employer. If you open it on your own, you can deduct the contributions from your taxes. If it is through your employer, a portion of your salary or wage goes into the account pre-tax.
FSAs at a Glance
FSAs are accounts that employers can include as part of their benefits package — in other words, you cannot open one on your own, and they are tied to the employer. The funds added to an FSA will not roll over from year to year, with the exception of up to $550, depending on the policies of the company you work for.
The IRS sets the threshold for maximum FSA contributions per year, and for 2021, that is $2,750. The money is pre-tax, meaning it is taken out of your paycheck before taxes are levied. In the vast majority of cases, these accounts are prefunded, meaning the full amount of your expected contribution for the year is available right from the start.
HSAs vs. FSAs: How Are They Different?
While there are a lot of commonalities between HSAs and FSAs, the differences are key to understanding them and how to make them work for you. Here’s what sets them apart.
|How to Qualify||Take out a high-deductible health insurance policy.||Hold a job where an FSA is included in the benefits package.|
|2021 Contribution Limit||$3,600||$2,750|
|Contribution Adjustments||Anytime||During special or open enrollment periods.|
|Expiration||Funds roll over from year to year, allowing you to continue growing your balance.||Funds expire yearly on December 31st.|
|Account Ownership||The account holder||The employer|
|Using Funds||Pay for medical expenses or withdraw for a 20% penalty.||In most cases, they 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 and FSAs Cover Dental Treatment?
For both HSAs and FSAs, there are limits on what forms of medical care are covered. The basic guidelines are that if something is essential medical care, it is covered; if it is cosmetic, it is not.
When looking at dental treatment, this means that anything that either treats or prevents dental disease or related health concerns is a qualifying expense. If a procedure simply addresses aesthetic concerns, it isn’t.
Why Orthodontics Is a Gray Area
The line between essential and cosmetic treatment can be pretty thin in any medical field, but this is especially true with orthodontics. Braces absolutely can be a medical necessity, correcting problems that cause pain, tooth decay, gum disease, and more. However, they can also be cosmetic, correcting issues related to spacing that aren’t causing harm but might be dinging the patient’s self-esteem.
Let’s put this into context.
A small gap between the top front teeth usually doesn’t cause problems with other teeth or your overall oral health. Closing this gap would be a cosmetic treatment. However, if this gap is larger, it might force other teeth out of alignment and prevent the top and bottom arches from matching up properly. At this point, correcting tooth alignment becomes essential, not cosmetic.
This means that orthodontic coverage under HSAs and FSAs is a little up in the air. You will need to be evaluated by a dentist or orthodontist as well as speak with your account administrator to determine if your treatment is a qualifying expense.
Dental Procedures Typically Covered by HSAs and FSAs
- Braces and aligners (in most cases)
- Sealants and bonding
- Fluoride treatments
- Dental cleanings
- X-rays and scans
- Root canals
- Gum surgery
HSA and FSA Braces Coverage
Out of the most common appliances for correcting tooth alignment, braces tend to be the easiest to get coverage for. This is because they are well-established appliances known to correct even severe orthodontic abnormalities. While there can still be limits, HSA and FSA administrators are more likely to default to considering treatment with braces as essential over cosmetic.
Learn More About HSA & FSA Coverage for Braces
HSA and FSA Invisalign Coverage
When Invisalign first debuted, it was met with some skepticism, and many considered it a purely cosmetic treatment. Now, this isn’t usually the case. Thanks to advancements in design and attachments, Invisalign aligners can address a wide variety of alignment issues, even correcting problems with the jaw. HSAs and FSAs are pretty open to Invisalign coverage but might still be hesitant in some cases.
Learn More About HSA & FSA Coverage for Invisalign
HSA and FSA At-Home Aligners Coverage
Online aligners, like SmileDirectClub and Byte, are among the newest forms of orthodontic treatment. Additionally, many of them can only treat mild to moderate spacing concerns, which puts them closer to the cosmetic side of treatment.
So, does that mean HSAs and FSAs won’t cover them? Not necessarily. Every administrator interprets essential vs. cosmetic in different ways. Verify with yours whether or not mail-order aligners are a qualifying expense.
Learn More About HSA & FSA Coverage for At-Home Aligners
- Do HSA Funds Cover Byte Clear Aligners?
- Do HSA Funds Cover SmileDirectClub Clear Aligners?
- Do HSA Funds Cover Candid Clear Aligners?
- Do HSA Funds Cover AlignerCo Clear Aligners?
- Do FSA Funds Cover SmileDirectClub Clear Aligners?
- Do FSA Funds Cover Candid Clear Aligners?
- Do FSA Funds Cover AlignerCo Clear Aligners?
- Do FSA Funds Cover Byte Clear Aligners?
How to Apply HSA and FSA Funds to Orthodontic Treatment
If your orthodontic treatment is deemed a qualifying expense, you will be able to apply your HSA or FSA funds to your treatment. But if you’ve never utilized these funds before, you might not be sure how to do it. Here’s what you need to know.
Using HSA Funds for Orthodontics
Applying HSA funds to orthodontic care is pretty simple; you just use the money like you would with any other bank account — for the most part.
If you have enough money in your HSA account to pay for your orthodontic treatment in full, you might be able to get a small discount from your provider. If not, you will need to set up a payment plan.
What this payment plan looks like will depend on what you can afford and what your orthodontist offers. Usually, it will include a down payment plus monthly installments spread out over 24-36 months. You can use your HSA to cover all of this — just make sure you always have enough in your account to cover the monthly drafts without contributing more than the yearly limit.
Keep in mind that with an HSA, you can reimburse yourself for whatever you paid out of pocket — even years down the road. So, if your HSA funds are only enough for half of your treatment this year, you could reimburse yourself for the other half next year.
Using FSA Funds for Orthodontics
When it comes to using your FSA funds for orthodontic treatment, most of the steps you need to take are similar to using a regular bank account. Due to the limits on FSA contributions and the fact that they do not roll over, you likely will not have enough in your account to pay for treatment in full unless you choose mail-order aligners. This means that in most cases, you will need to work out a payment plan with your dentist or orthodontist.
FSAs have special rules for applying funds to orthodontic treatment. Specifically, you can apply funds to orthodontic payments even if your appliance was put on or given to you in the previous year. With other dental treatments, you can only use your FSA money for those rendered that year. However, you cannot reimburse yourself years later.
Using HSA and FSA Funds for Related Expenses
The cost of orthodontic care isn’t limited to the appliances alone. You also will need at least some of the following:
- Initial exam
- 3D scans
Generally speaking, both HSAs and FSAs will cover the majority of these related expenses even if it is determined that your use of orthodontics is cosmetic. That is because most are diagnostics.
How to Pay Using HSA or FSA Funds
Each administrator sets up their own methods for accessing your HSA or FSA funds, which means you need to know what your options are. Take time to research this or reach out to your administrator. However, most will offer some combination of the following:
- Debit Card: Most HSAs and FSAs will have a debit card attached to the account. You use it like you would a normal debit card — the only difference is that it won’t work at terminals for non-medical merchants.
- Checks: This option is becoming less common, and most HSA and FSA managers no longer send them out to account holders by default. However, you can usually request them and then use them as you would checks for a traditional bank account.
- Online Bill Pay: This is becoming the most popular way to use HSA and FSA funds. You use your online banking portal to send money to your healthcare provider or medical merchant, as well as reimburse yourself by transferring funds to your primary bank account.
- Reimbursement: Sometimes, you need to pay out of pocket first before using your HSA or FSA funds. When this happens, you can reimburse yourself. You can do this on your own through your online banking portal or file for reimbursement by fax or mail.
Combining HSA and FSA Funds With Other Payment Methods
For many, using your HSA and FSA funds alone won’t be enough to fully cover the costs associated with orthodontic treatment. In some cases, they can lower the costs enough that getting braces or aligners is accessible. In other cases, your dream smile may still be out of reach.
First, know that if you have an HSA and an FSA, you can use both — you just need to be careful. Do not double bill the accounts, and make sure your FSA is a limited one specifically meant for things like dental and vision expenses.
Second, don’t assume that your only option is to cover the remaining costs out of pocket or upfront. There are other solutions that can help make the cost of treatment better work for you.
If you have dental insurance, it might come with orthodontic benefits. In most cases, these policies will cover orthodontic treatment in part — typically around 50 percent of the cost. However, some policies change their coverage for adult patients. Be sure to know the exact terms of your policy and make certain you do not double bill between your insurance policy and your HSA or FSA.
Financing and Payment Plans
Most dental and orthodontic offices will help connect patients with financing options as well as craft payment plans that are through their practice. With both options, there is typically a down payment and then monthly installments, but the specifics will vary. This can help break up the out-of-pocket costs over time and might even make it easier to add to your accounts, then use the funds to cover treatment.
Personal loans are offered by banks and credit unions. While the provider can set limits on what the money is used for, most are open to applying loan funds to medical treatments. This method gives you quick access to the full cost of treatment, allowing you to pay in advance and potentially receive discounts. Then, you pay back a little on the loan each month until it is paid off.
In some cases, you might be able to take advantage of discounts and deals to lower the cost of treatment. Sometimes, dentists and orthodontists will run specials, and there are always sites like Groupon.
However, the treatments most likely to feature discounts are at-home aligners. Companies like SmileDirectClub and Byte will often have discounts on their website to help you reduce the overall cost of treatment.
Orthodontic treatment can be a confidence booster as well as improve your oral and overall health. In most cases, you can use your HSA or FSA funds to reduce the financial burden associated with braces and aligners. With this and other payment methods, you should be able to make orthodontic treatment accessible. To learn more about the specifics, talk to your HSA or FSA administrator.
Frequently Asked Questions
Who decides if my alignment concerns are medical or cosmetic?
This is a combination of your medical provider and the administrator of your HSA or FSA. Your dentist or orthodontist will tell you if your alignment issues are impacting your health, then you need to contact your administrator to find out what their guidelines are.
Will it be hard to use HSA or FSA funds for orthodontic treatment?
As long as it is a qualifying expense, no. You just select the right payment method for you and your medical provider, then submit payment.
What is the maximum amount I can spend on orthodontics using my HSA or FSA?
There is no limit on how much of your HSA or FSA funds can be applied to orthodontic treatment — besides what is in your account. It is fine to use all your funds to pay for braces or aligners.
Will I still have access to my HSA or FSA after changing employers?
HSAs and FSAs differ here. With an HSA, you are the account owner and it follows you; as long as you still meet the eligibility requirements, you continue to have access to your HSA funds.
With an FSA, your account is tied to your employer. If your new job is a different position at the same company, you might get to keep your FSA. If it isn’t, you will lose it.
What if I use my HSA or FSA to pay for something that isn’t a qualifying expense?
There will be financial consequences. With an HSA, you will pay taxes on the money you used plus a 20 percent fee. When you use FSA funds for non-qualifying expenses, you have to pay taxes on the money and your employer will fine you.
How do I get an HSA?
You talk to your employer or open one directly through a bank or credit union. You will need to provide proof of having a high-deductible health plan and meet the requirements regarding age and insurance status.
How do I get an FSA?
FSAs are strictly available through employers. For this, you need a job with a benefits package and for an FSA to be included in that package.
How do I verify my HSA or FSA balance?
Typically, you can check your balance using the online banking portal from your administrator. You also can call the administrator and get your information over the phone.
Am I allowed to use HSA or FSA funds for my spouse’s orthodontic care?
Yes, HSA and FSA funds can cover any qualifying expense for both spouses and dependents.