Using An HSA for Dental Implants to Maximize Tax Savings

A Health Savings Account (HSA) covers dental implants in most instances.

However, many people need to learn how to use an HSA to maximize their tax savings, making their tooth implant treatment the most affordable.

First, many people know annual contribution limits, but few know an obscure provision for future-year reimbursements!

Second, cosmetic procedures are HSA ineligible, and dental implants sometimes fall into this category, meaning it pays to understand the IRS dividing line.

Finally, older adults are most likely to need replacement teeth, and a second obscure rule allows some seniors to use IRA funds to replenish their HSA.

What Is a Health Savings Account?

To optimally use a Health Savings Account (HSA) for dental implants, you must first understand the basics. While some of these finer points might seem trivial, they can enormously impact your after-tax treatment costs.

An HSA is a legitimate government grant for dental implants, provided you learn how to capitalize on this seemingly mundane IRS-sanctioned benefit.

High Deductible Health Plan

To be eligible for an HSA, you must be enrolled in a high-deductible health plan (HDHP). An HDHP is a medical insurance plan that meets IRS-specified rules for deductibles and annual out-of-pocket maximums.

Minimum annual deductible$1,500$3,000
Maximum out-of-pocket expense$7,500$15,000

Health insurance sometimes covers dental implants when medically necessary. However, this happens rarely, meaning the high deductible will probably not impact what you must spend at the dentist to replace your missing teeth.

HSA Contribution Limits

HSA annual contribution limits pose little concern for patients needing a single tooth implant. However, they could present problems for those with more expensive and extensive treatment plans.

The contribution limits change annually (current as of publication date).

  • $3,650 individual coverage
  • $7,300 family coverage
  • $1,000 additional for over 55

Dental implant financing and payment plans can provide the upfront cash needed to begin treatment if you do not have sufficient HSA funds. Yes, the lender will charge interest, but the tax savings might be superior, as you will quickly learn.

HSA Future Reimbursements

IRS rules for future reimbursement of eligible expenses make using an HSA ideal for the most expensive dental implant treatment plans, including full-mouth restorations costing $35,000 or more.

In future years, you can reimburse yourself with HSA tax-favored dollars for any IRS-qualified medical or dental expense. Of course, you must continue with an HDHP to make these catchup contributions.

HSA Tax Savings

Unlimited tax savings that begin immediately are the compelling reason to use your HSA to pay for dental implants. No other IRS-supported option reduces your total costs as much.

Consider this example for a hypothetical married couple (not retired) with a combined AGI of $100,000 who work in California. At least one employer offers an HSA, and one person chooses a plan covering both spouses.

Implant ProcedureAverage CostSavings (38.95%)Years to Reimburse
Single Tooth$3,500$1,3631
Upper or Lower Jaw$25,000$9,7373.4

In this case, the couple reduces their costs by $38.95%.

  • Federal: 22%
  • State: 9.3%
  • FICA: 7.65%

Does HSA Cover Implants?

You can use your HSA to generate these enormous tax savings only if your plan administrator agrees to cover your dental implant treatment plan. Therefore, you should learn the nuances of cosmetic versus medically necessary care and submit a preapproval request.

Eligible Expenses

Your HSA should cover dental implants when the plan administrator approves the reimbursement claim. Per IRS guidance, qualified charges fit the criteria explained in Publication 502 Medical and Dental Expenses.

Publication 502 does not mention dental implants by name but includes several statements suggesting when your HSA administrator will deem the expenses eligible and when not.

You Can IncludeYou Cannot Include
Artificial teethCosmetic procedures
Alleviation of dental diseaseImprove appearance only
Promote proper body function 

For example, you can include implants that restore function to missing teeth, such as mastication, which is cutting, mixing, and grinding ingested food. Meanwhile, replacing existing teeth because they are worn, discolored, or misshaped might not qualify.

Retired Seniors

Most importantly, an HSA covers dental implants for retired seniors, the group most likely to have missing teeth. Under an obscure IRS rule, older adults with an HDHP can take advantage before migrating to Medicare – even if their account balance is insufficient.

Dental implants for seniors paid for by Medicare take a bite out of your costs. Advantage Plans include oral care benefits, but the annual benefit maximum falls below the price of a single tooth replacement. An HSA can lower expenses further.

The IRS permits a qualified funding distribution from your traditional IRA or Roth IRA to your HSA. Seniors might pay income taxes if they take the money straight from their IRA but avoid levies by transferring to their HSA to fund dental implant expenses.