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.
FSA plans can differ depending on your employer, so if you are unclear about whether or not a procedure is covered, it may help to contact HR and carefully go over your policy.
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:
- Teeth cleaning
- Fillings and sealants
- Tooth extraction
- Inlays and onlays
- All diagnostic and preventative services
- Treatments for gingivitis, temporomandibular joint syndrome and disorder, gum recession, and oral surgery
- In 2019 FSA contribution level maximum is $2,700, according to the IRS.
- A flexible spending account is a "use it or lose it" type of benefit. If you don’t spend down your money by a specified date during a calendar year, you lose those funds.
- Some employers may allow for a carry-over amount or offer a short-term extension.
- Anything related to cosmetic dentistry is automatically not covered by an FSA.
- If you have a dependent care flexible spending account, another kind of FSA offered by employers, dental care reimbursement is not eligible.
Expenses That Are Excluded
Unfortunately, cosmetic procedures like teeth whitening, veneers, or cosmetic orthodontia are not covered by FSA plans. If you want to get your teeth bright and white, you'll have to pay out of pocket, as cosmetic dentistry is simply not on the list. In fact, you can't even buy toothpaste of any kind or even dental floss using FSA funds as they are not eligible expenses. Oral pain remedies, however, are typically covered by plans.
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 may cover.
Know Your Plan: 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.