Using a Health Savings Account (HSA) to Pay Dental Expenses

The IRS explicitly allows participants to use Health Savings Account (HSA) funds to cover expenses to prevent and alleviate dental disease. 

However, HSA rules have several intriguing twists that people should know to maximize several money-saving opportunities that are easy to miss.

First, some cosmetic dental procedures automatically qualify, while others are never eligible for reimbursement, and others fall into a gray area.

Second, emergency dental work uncovers two hidden aspects easily overlooked: reimbursing yourself and health insurance covering oral care.

Finally, just because you can use an HSA for predictable expenses such as orthodontia does not mean that you should.  You might have better alternatives.

Using HSA for Cosmetic Dentistry

There are times when you can use Health Savings Account money to pay for cosmetic dentistry. Some procedures that fit into this category qualify as an eligible expense. In contrast, others do not – while some fall into a gray area.

IRS publication 502 includes a definition for cosmetic surgery that we can graft into dentistry: any procedure designed to improve your appearance that does not promote function or prevent or treat disease.[1]

Table Of Contents

Implants

Under IRS rules, an HSA will cover dental implants even though the industry often classifies them as cosmetic. The procedures restore function to missing teeth: mastication (cutting, mixing, and grinding ingested food).

Many dental plans categorize implants as cosmetic because other less expensive artificial teeth exist, such as dentures. However, Publication 502 explicitly deems artificial teeth as eligible for tax-favored treatment.

The case for implants is black and white.

Veneers

Your HSA could sometimes cover dental veneers, but you will have to work with your dentist to document why they are necessary (prevent or alleviate dental disease, restore function) rather than cosmetic (improve appearance).

Present the documentation to your plan administrator and ask for pre-approval. Also, keep the records on file in case of a rare IRS audit.

Necessary

Cosmetic

Broken or chipped

Fill in gaps

Tetracycline stains

Coffee stains/ yellowing

Fluoride stains

Change shape or length

Acid reflux

Adjust minor misalignments

Celiac Disease

 

Enamel Hypoplasia

 

As you can see, veneers fall squarely into a gray area for eligibility.

Tooth Whitening

You cannot use HSA funds to pay for tooth whitening, even though there may be times when the procedure could fall outside the cosmetic category. For instance, your dentist might recommend whitening to remove stains caused by prescription medications.

So, why might the more expensive veneers be an eligible treatment for Tetracycline and Fluoride stains but cheaper whitening solutions are not?

Because IRS Publication 502 excludes teeth whitening but is silent on veneers. Your plan administrator will dismiss any claims because they can easily find the ruling in black and white.

Using HSA for Emergency Dental Work

You can typically use Health Savings Account funds to pay for emergency dental work because pain relief falls into the necessary category, making these charges eligible for reimbursement.

However, we sometimes neglect to put enough money aside for the unexpected. Two common scenarios illustrate hidden HSA features that you might find helpful.

Root Canal

An HSA will cover emergency root canal expenses because the relief of intense tooth pain and the treatment of dental disease (dead tooth pulp) makes the costs eligible.

But what if you do not have funds in your account to cover surprise root canal costs? Keep your receipts and reimburse yourself after replenishing the account.

  • You can change contributions in the middle of the plan year up to the annual maximum [2]
  • As long as you establish an HSA account before incurring a qualifying expense, you can pay yourself back later using pre-tax dollars [3]

Wisdom Teeth Removal

An HSA should cover emergency removal of wisdom teeth because the surgery treats a dental disease that causes intense pain: impacted third molars.

Your HSA will always connect to a qualifying High Deductible Health Plan, which might cover most of the cost to extract bony-impacted wisdom teeth as the primary payer – even if you do not have dental insurance.

  • Partially bony extractions
  • Fully bony extractions
  • Deep sedation (Anesthesia)
  • Therapeutic Drug Injection (Antibiotics)

File an insurance claim and use your pre-tax money for other purposes.

Using HSA for Orthodontic Braces

While your Health Saving Account should cover orthodontic braces, using these pre-tax funds to pay for predictable expenses may not be the best use. The need to straighten crooked teeth should not come as a surprise.

Alternatives better suited for foreseeable treatments do not force you to squander the advantage of keeping HSA money in the account for emergencies or retirement.  

  1. You avoid paying federal, state, and FICA taxes
  2. You can roll over unused funds every year
  3. Investment income gains grow tax-free
  4. After age 65, you can use the money for any reason

Invisalign for Adults

You can use your HSA to pay for Invisalign monthly costs and other clear braces intended for adults. However, a Flexible Spending Account (FSA) offers similar tax savings and is more appropriate for this expected expense.

An FSA comes with a use-it-or-lose-it rule, making it better suited for predictable costs such as using Invisalign to straighten teeth that have been crooked for decades.

By using FSA money for Invisalign instead, you increase your total pre-tax contribution limit – thereby maximizing your overall savings!

FSAHSATotal

Individual

$2,750

$3,600

$6,350

Husband & Wife

$5,500

$7,200

$12,700

Metal Braces for Kids

You can use your HSA to pay for metal braces for your kids because these expenses qualify, provided you claim your child as a dependent on your tax return. However, parents have plenty of early warning signs about the need to correct their teenagers’ malocclusion.

Investing in dental insurance with orthodontic benefits might be a better alternative because you have plenty of advance notice. While you cannot use HSA money to fund the premiums, you preserve this precious resource you can utilize in retirement or emergencies.

  • Get discounts from in-network orthodontists who cannot charge more than the allowed amount negotiated by the issuing company
  • Maximize annual pre-tax contribution limits by paying for orthodontic insurance via payroll deduction – if offered by your employer

Article Citations:

[1] Publication 502 Cosmetic Procedures

[2] OptumFinancial: HSA Frequently Asked Questions

[3] Lively HSA Reimbursement Rules