Paying for Dental Care with a Health Savings Account

Do you perhaps fit in one of the following groups?

  • *Employer offers no dental benefit plan.
  • *Employer offers dental benefit plan but does not subsidize premium, so it is no deal.
  • *Employer dental benefit plan excludes treatment you need, like implants.
  • *Dental plan that employer offers is a crumby PPO or DMO that excludes using good dentists not on the insurance list.
  • *You have a very healthy mouth, and virtually never need any treatment except regular cleanings, exams, and occasional x-rays, so dental coverage does not make economic sense.
  • *You are a self-employed individual without any form of dental coverage.

As expensive as dental care is, it really hurts to pay for it with after-tax income. Patients know that my #1 recommendation for funding dental care is through a FLEX benefit plan. It gives you complete freedom to pick dentists, and save all taxes on the money you put into it. You even avoid Social Security and Medicare taxes on salary you defer to the account!

Trouble is, as good as FLEX benefit plans are, not all employers offer them. And self-employed individuals cannot use them, unless they have a C-corporation.

What is a patient to do?

A good alternative is to use a Health Savings Account, which is much more efficient than buying dental insurance. Unlike when using a FLEX benefit plan, you will not avoid Social Security and Medicare taxes. But it will save some Federal and State income tax. How would you go about getting a Health Savings Account (HSA) open?

1. You must select a high-deductible, HSA-eligible medical coverage. More and more employers are offering this option. Typically the deductible must be at least $1200.
2. Fund the account to an EXCESS of what you need to pay for your medical deductible and copayments. For instance, if your typical out-of-pocket yearly medical expenses are $1500, contribute that PLUS however much per year you believe you will spend on family dental expenses. Ordinarily one would think to only contribute as much as a dental plan premium would cost monthly. But remember that any dental plan includes substantial out-of-pocket deductibles and copayments. So a starter would be to contribute 150% of the cost of premiums to a good dental plan.
3. The best place I have found to open a Health Savings Account is Delta Community Credit Union, because they have no fees and pay a good rate of interest. Perhaps some other credit unions have as good a deal.
4. You will get an HSA checkbook and/or debit card to pay your dentist with. He will love you, as you save him so many insurance hassles! And no insurance company will prevent you from having any dentistry you feel you want and need.

Individual dental benefit plans have always been a waste of money. We are finding that more employer-based dental plans are either poorly written, not a good deal, or both. Skipping the middlemen of dental plan underwriters can save you money and give you unlimited freedom of choice!

Feel free to e-mail me at KimHenryDMD@mindspring.com if you have any questions about implementing HSA dental funding.