If braces for children or adults are on the horizon for your family, cost is probably on your mind. The question of how to pay for braces can be challenging for many families. One way to help pay for braces could be a health savings account (HSA). Learn about how an HSA works with braces, what expenses are eligible, and more about how cover the bill from an orthodontist.
What is an HSA?
A Health Savings Account is a kind of account you can have if you also have a type of medical insurance plan designated as a High Deductible Health Plan (HDHP). For employer provided health insurance, your employer should let you know if you are eligible for a HSA. The idea behind an HSA is you put money into the account on a regular basis and then withdraw money later when major medical expenses arise. HSAs are unique types of accounts because they are “triple tax free.”
When you contribute to an HSA, you receive a tax deduction. While money is in an HSA, if it earns interest or grows, you pay no taxes. Later on, as long as you withdraw the money for what the IRS deems a “qualified medical expense”, you pay no taxes then either. Although, keep in mind the HSA is used to cover what insurance doesn't or what is known as “out of pocket expenses”.
"Strength and dignity are her clothing, And she smiles at the future." Proverbs 31:25
Does My Family’s HSA Cover Procedures Like Orthodontia (Braces)?
Braces and related service from an orthodontist are almost always considered a “qualified medical expense.” This is the test the IRS requires to use HSA money and avoid taxes penalties. The confusion on this question is we often associate braces with a “better smile.” Purely cosmetic procedures are usually not eligible uses for an HSA. Braces, while they may change your smile, are considered eligible when a medical professional recommends the procedure. Although the question most often comes up for children or teenagers, adults who get braces also, generally, meet the criteria.
Can I use an HSA for dental expenses like braces in my family?
What if my Family Has Dental Insurance and an HSA?
If your family has dental insurance, you might be wondering how this affects your potential use of HSA money. First, not all dental insurance will cover any costs for braces. If there is coverage for braces, read the find print about when you are eligible and for how much. A common provision with dental insurances that covers orthodontia is you need to be on the policy for a period of time before braces are a covered procedure. For example, a plan could require your family to be insured for 6 months before braces are covered. Other procedures like cleanings or preventative care could be covered with no waiting period. A waiting period, if it applies, generally would not exceed more than a year.
Waiting period example
Dental insurance that does cover braces, rarely pays for the entire procedure. You’ll very likely have additional out of pocket costs for what a dental insurance policy does not cover. These out of pocket costs can be paid for with your HSA if you choose.
How one employer structures dental coverage and a waiting period for braces
Can I use an HSA for Braces if my Family opts into a Payment Plan?
Due to the big expense associated with braces, many orthodontists offer payment plans. For example, some offices will offer to break the cost of braces into a monthly payment over the course of the treatment. If your family opts into a payment plan, you can choose to use HSA money to help with payments. Although, keep in mind payment plans often carry a larger overall cost so be sure to read the terms and weigh options before making a choice.
If you decide to use your family’s HSA to pay for a portion or all the cost of braces, you’ll have a choice about how to use the money to pay a bill. The choice, depending on your HSA provider, falls into two primary categories.
Direct payment is when money goes directly from the HSA to the orthodontist office. Most HSA providers have a few ways you can go about this. Many HSA companies offer a debit card that pulls money from your HSA. You use this just like any other debit card. Providers will also give you an option to request payment be sent to the provider. This generally entails logging into your account to provide instructions which usually results in a check mailed directly to the orthodontist’s office. Some HSA providers allow you to perform this on their mobile app.
Reimbursement is what it sounds like. In this scenario, you pay the bill with your personal card or checking just like any other bill. You then request to reimburse yourself from your HSA. Your HSA provider will then send the amount requested via an electronic bank transfer or a check to you.
One thing to note about reimbursement is you don’t have to reimburse yourself immediately. You can pay the bill out of pocket and then decide to reimburse yourself for all or a portion of the procedure cost later on. While there’s no official deadline to do so, try to keep it in the same calendar year whenever possible for ease of recordkeeping.
Are Over the Counter Supplies/Medicines Related to Braces HSA Eligible?
While you or a family member has braces, there may be a need for supplies you get a from the pharmacy or other store. Can you use HSA money for those supplies? Very likely yes. The key is if your orthodontist recommended the supply or medicine. For example, after getting braces on your doctor recommends aspirin to help your son with swelling. Because it’s recommended by a medical professional, you should be able to use HSA money for this sort of expense.
Keeping Records for Your HSA and Money Used for Braces
If you choose to use health savings account money for braces, it’s very important to keep records in the event of an audit by the IRS. Retain all statements, invoices, bills, explanation of benefits, and receipts related to treatment for braces. Even if you don’t decide to reimburse yourself right away, keep the records anyway in the event you decide to seek reimbursement later. Maintain these records for 7 years. Digital copies, kept securely, are fine but make sure you have an adequate backup.
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