Did you know that the IRS offers three different dental implant discount plans?

Your expenses are tax-deductible, which means you can write them off when you file Schedule A in April or pay for treatment using a Flexible Spending Account (FSA) or a Health Savings Account (HSA).

The pre-tax alternatives (FSA & HSA) provide first-dollar savings with no outlay thresholds to meet and work best for patients needing to replace one tooth due to yearly contribution limits.

On the other hand, paying for dental implants with after-tax money enables you to deduct expenses later on and works better for patients needing full mouth replacement because of two high outlay minimums.  

After-Tax Dental Implant Discount Plans

Your dental implant expenses are tax-deductible in the United States per IRS guidelines. Topic 502 clearly states that payments made for false teeth qualify for inclusion on Schedule A line 1.[1]

However, one step maximizes the IRS discount plans: condense charges for a full arch or mouth into a single calendar year to overcome standard and medical expense deduction minimums.

Standard Deductions

Dental implant financing programs enable patients to consolidate their tax-deductible outlay into one calendar year, which helps them meet the two critical qualifiers. 

First, your itemized expenses submitted on Schedule A must exceed the standard deduction; otherwise, you do not qualify for the IRS discounts.

The standard deductions for 2021 break out as follows:

  • Single and married filing separately: $12,550
  • Head of household: $18,800
  • Married filing jointly: $25,100

Your itemized deductions can include any of the following:[2]

  • Charitable donations
  • Mortgage interest and PMI premiums
  • State and local taxes
  • Casualty and theft losses
  • Medical & dental expenses

Medical & Dental Deductions

The cost of dental implants without insurance range much higher for multi-tooth restorations, making it easier for patients to reach the second critical tax deduction hurdle.

  • 3 – 4 tooth bridge: $8,500 average
  • Top & bottom supported dentures: $34,000 average

Your unreimbursed medical and dental expenses must exceed 7.5% of your Adjusted Gross Income (AGI). To keep the math simple, suppose the AGI for a married couple filing a joint return is $100,000.

In this example, the IRS discounts kick in once the totals top $7,500. The husband and wife duo falls into the 22% marginal bracket (mostly).

Unreimbursed $MAGISavingsDiscount %

Under $7,500

$100,000

$0

0%

$12,500

$95,000

$1,100

8.8%

$17,500

$90,000

$2,200

12.6%

$27,500

$80,000

$4,295

15.6%

$37,500

$70,000

$3,600

9.6%

As you can see, the total savings and markdown percentage increase with higher levels of unreimbursed charges – provided your tax bracket remains constant. Consolidating outlay into a single calendar year is crucial for this reason – as is including insurance premiums.

Pre-Tax Dental Implant Discount Plans

Making pre-tax payroll contributions offers first dollar savings on qualifying dental implant expenses – with more significant discount percentages than using IRS Schedule A. However, patients needing to replace just one tooth find this alternative works best because of the annual limits.

Consider our married couple example again. This time, the duo spends $4,250 to replace a single tooth, while AGI ($100,000) remains the same.

First, they get the work done close to half-price when you compare the amounts you must earn to fund treatment without pre-taxing payroll contributions ($6,041).

  • Federal Income: 22%
  • FICA: 7.65%
  • Levies avoided: $6,041 * 29.65% = $1,791
  • Discount level: $1,791/$4,250 = 42%

Second, they realize first-dollar savings even though the amount spent ($4,250) is well below the two critical thresholds associated with Schedule A deductions.

  1. Standard: $25,100
  2. 5% of AGI: $7,500

Flexible Spending Accounts

Patients with bad credit history love the financing advantages of a Flexible Spending Account. An FSA offers interest-free dental implant loans without a credit check with a bonus of bigger first dollar discount percentages associated with pre-tax payroll deductions.

  • Just be aware of the FSA use-it-or-lose-it rule. Any unspent amounts at the end of the plan year could revert to your employer. Think of it as possible payback for having to front expenses not yet collected via payroll.
  • Engage the FSA loan by opting into the full contribution limit ($2,750 per person) during open enrollment. Your employer must allow every employee to participate regardless of their poor credit score.
  • Schedule the work for the beginning of the plan year, and your employer must reimburse qualifying expenses immediately. You then have up to 52 weeks to repay the obligation with pre-tax money.

Health Savings Accounts

Contributions held in your Health Savings Account (HSA) also offer more significant discounts on dental implant expenses. The higher annual contribution limits ($3,550 for self-only and $7,100 for families) can help us illustrate the hidden benefit of pre-tax payroll deductions.

Making pre-tax contributions into an FSA or HSA reduces the amount of income subject to payroll levies (Federal Insurance Contributions Act – FICA). You do not realize this unseen benefit when making Schedule A deductions. Employers and employees split the cost as per this 2020 schedule.

EmployeeEmployer

Under $142,800

7.65%

7.65%

Over $142,800

1.45%

1.45%

While your HSA does not have a use-it-or-lose-it rule and you can rollover any unused balances, be wary of high health insurance deductibles. You might tap into the account to pay for dental implants and then experience a future health crisis.

Final Thoughts

While dental implants are tax-deductible under IRS rules, the vehicle offering the most significant discounts depends on your income level and the amount of work you can cram into a calendar year.

Taking deductions using Schedule A favors patients undergoing the most expensive full-mouth restorations because of two annual hurdles: the standard deduction and 7.5% of AGI for unreimbursed medical and dental expenses.

Pre-tax programs offer first-dollar savings and work better for patients with single tooth replacement needs. Both the FSA and HSA annual contribution limits fall very close to the average cost to replace one missing tooth.

[1] IRS Topic 502

[2] IRS Schedule A Instructions