Flexible spending accounts (FSAs) are accounts that allow employees to obtain reimbursement for various medical expenses. Because FSAs are classified as tax-exempt savings accounts, no employment or federal income taxes are deducted from contributions. The IRS states that an FSA has no reporting requirements for the purposes of federal tax returns. Distributions are free provided they are used for qualified medical expenses.
FSAs can be used to pay for certain dental expenses, including deductibles and co-payments. However, not all types of dental procedures are covered.
Dental Expenses That Can Be Paid With FSAs
FSA reimbursement rules generally follow Internal Revenue Service (IRS) deduction rules as spelled out in IRS Publication 502, Medical and Dental Expenses. The basic rule is that anything that treats or prevents a dental disease is eligible for FSA coverage. This includes teeth cleaning, fillings, sealants, crowns, bonding, dentures, tooth extraction, inlays, onlays and all diagnostic and preventative services. Treatments for gingivitis, temporomandibular joint syndrome and disorder, gum recession and oral surgery are also covered. Some FSAs can also be use to pay for orthodontia.
Expenses That Are Excluded
FSA plans do not cover any form of cosmetic dentistry. The plans do not cover teeth whitening, veneers or cosmetic orthodontia.
There is an obvious discrepancy with orthodontia. While the IRS says that some procedures treat disease and some procedures are cosmetic, there is no specific set of rules that defines the specifics regarding which procedures qualify for coverage under an FSA. Your orthodontist should be able to help you determine what your plan covers.
Flexible Spending Plans Vary
The IRS provides general rules for FSA plans, however, each individual FSA provider interprets those rules differently. Talk to your employer and your plan provider before you start any course of treatment. Your dental office should be willing to coordinate with your insurance provider to make sure the services you are receiving are covered under your FSA plan. (For related reading, see: How Flexible Spending Accounts Work.)