How to Use Flexible Spending Accounts and Health Savings Accounts for Dental Expenses

Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) are two types of tax-advantaged accounts that allow individuals to set aside funds for healthcare-related expenses. This article will outline how to use these accounts for dental expenses, including eligible and ineligible expenses, contributing to an FSA or HSA, and how to claim reimbursements.

What are FSA and HSA accounts?

Flexible Spending Accounts (FSAs) are employer-sponsored accounts that allow individuals to set aside pre-tax dollars to pay for medical expenses. Employees can choose to contribute up to a certain amount each year, and the money is taken out of their paycheck before taxes. FSAs are typically offered as part of an employer’s benefits package, and the money can be used to pay for medical, dental and vision expenses.

Health Savings Accounts (HSAs) are tax-advantaged accounts that allow individuals to set aside pre-tax dollars to pay for medical expenses. HSAs are usually offered in conjunction with a High Deductible Health Plan (HDHP), and they allow individuals to save up to $3,500 per year for individuals or $7,000 for families.

Benefits of using FSA and HSA to cover dental expenses

Using an FSA or an HSA for dental expenses can help you save money on taxes. Both types of accounts offer tax savings and the potential to save money on medical expenses. Additionally, HSAs offer the potential to earn interest and potentially even invest the money in the account, which can result in even greater savings.

FSA and HSA accounts can be used to pay for a wide range of dental expenses. Eligible expenses include:

Diagnostic services

Diagnostic services, such as exams and x-rays, are eligible for reimbursement from an FSA or HSA.

Preventive services

Preventive services, such as cleanings and fluoride treatments, are eligible for reimbursement from an FSA or HSA.

Restorative services

Restorative services, such as fillings, crowns, and bridges, are eligible for reimbursement from an FSA or HSA.

Orthodontia

Orthodontia, such as braces and retainers, is eligible for reimbursement from an FSA or HSA.

Oral surgery

Oral surgery, such as extractions and root canals, is eligible for reimbursement from an FSA or HSA.

Periodontics

Periodontics, such as scaling and root planning, is eligible for reimbursement from an FSA or HSA.

Endodontics

Endodontics, such as root canal therapy, is eligible for reimbursement from an FSA or HSA.

Not all dental expenses are eligible for reimbursement from an FSA or HSA. Ineligible expenses include:

Cosmetic dental services

Cosmetic dental services, such as teeth whitening, are not eligible for reimbursement from an FSA or HSA.

Elective services

Elective services, such as braces for purely cosmetic reasons, are not eligible for reimbursement from an FSA or HSA.

In order to use an FSA or HSA to pay for dental expenses, you must first contribute to the account.

Maximizing contributions

When contributing to an FSA or HSA, it is important to maximize contributions in order to get the most from the account. For example, if an employer offers a match, it is important to contribute the maximum amount in order to get the full match.

Filing taxes

When filing taxes, it is important to keep track of contributions to an FSA or HSA. Contributions to an FSA or HSA are tax-deductible, so it is important to keep track of contributions in order to take advantage of this tax benefit.

Once you have contributed to an FSA or HSA, you can use the funds to pay for dental expenses.

Paying with an FSA or HSA debit card

Many FSA or HSA accounts come with a debit card that can be used to make payments for eligible expenses. This makes it easy to pay for dental expenses without having to worry about submitting receipts.

Submitting receipts

If you do not have an FSA or HSA debit card, you can pay for dental expenses out of pocket and then submit receipts for reimbursement. Most FSA and HSA providers have an online portal where you can submit receipts for reimbursement.

Claiming reimbursement

Once you have submitted your receipts, you can claim reimbursement. Most FSA and HSA providers will reimburse you within a few days.

Tax implications

When using an FSA or HSA to pay for dental expenses, it is important to be aware of the tax implications. Contributions to an FSA or HSA are tax-deductible, and reimbursements are tax-free.

When deciding which type of account to use for dental expenses, it is important to consider the advantages of each type of account.

Advantages of an FSA

FSAs are advantageous because they allow individuals to set aside pre-tax dollars for medical expenses. Additionally, FSAs are typically offered as part of an employer’s benefits package, so they are easy to set up.

Advantages of an HSA

HSAs are advantageous because they offer more potential for savings. Individuals can save up to $3,500 per year for individuals or $7,000 for families, and the money can be invested for potential long-term growth. Additionally, HSAs are typically offered in conjunction with a High Deductible Health Plan (HDHP), so individuals can save on their insurance premiums.

Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) are both advantageous for paying for dental expenses. Both types of accounts offer tax savings and the potential to save money on medical expenses. Additionally, HSAs offer the potential to earn interest and potentially even invest the money in the account. When deciding which type of account to use for dental expenses, it is important to consider the advantages of each type of account.

Summary of benefits

Using an FSA or an HSA for dental expenses can help you save money on taxes, and both accounts offer tax savings and the potential to save money on medical expenses. Additionally, HSAs offer the potential to earn interest and potentially even invest the money in the account, which can result in even greater savings.

Comparing different types of accounts

When deciding which type of account to use for dental expenses, it is important to consider the advantages of each type of account. FSAs are advantageous because they allow individuals to set aside pre-tax dollars for medical expenses. Additionally, FSAs are typically offered as part of an employer’s benefits package, so they are easy to set up. HSAs are advantageous because they offer more potential for savings. Individuals can save up to $3,500 per year for individuals or $7,000 for families, and the money can be invested for potential long-term growth. Additionally, HSAs are typically offered in conjunction with a High Deductible Health Plan (HDHP), so individuals can save on their insurance premiums.

References:

Flexible Spending Accounts (FSAs). (n.d.). Retrieved October 22, 2020, from https://www.irs.gov/forms-pubs/flexible-spending-accounts-fsas

Health Savings Accounts (HSAs). (n.d.). Retrieved October 22, 2020, from https://www.irs.gov/forms-pubs/health-savings-accounts-hsas