Can You Use Your HSA for Dental Expenses?

A Health Savings Account, or HSA, is a tax-advantaged savings account for individuals enrolled in a high-deductible health plan (HDHP). Contributions are made on a pre-tax or tax-deductible basis, the funds grow tax-free, and can be withdrawn tax-free for qualified medical expenses. This triple-tax advantage is designed to help manage out-of-pocket medical, dental, and vision costs.

Unlike a Flexible Spending Account (FSA), the funds in an HSA roll over year after year and belong to you, even if you change jobs or health insurance plans. This allows the account to function as both a spending account for current health needs and a long-term investment for future medical expenses.

Qualified Dental Expenses for HSA Use

The Internal Revenue Service (IRS) allows you to use HSA funds for dental care that prevents or treats a specific dental disease or condition. These are costs associated with diagnosis, cure, mitigation, or treatment. If the primary purpose of the dental work is to address a medical or functional issue with your teeth or gums, it is an HSA-eligible expense.

Common qualified services include:

• Preventative care, such as teeth cleanings and the application of sealants
• Diagnostic services, including the X-rays needed to identify cavities
• Fillings, root canals, and extractions
• Crowns and bridges to restore the function of your teeth
• The costs for dentures, including any adhesives needed to secure them
• Orthodontic work, such as braces, which corrects misaligned teeth

Dental Expenses Not Covered by an HSA

While many dental procedures are covered, the IRS draws a line at cosmetic services. Any dental work performed solely to improve your appearance is not a qualified medical expense and cannot be paid for with tax-free HSA funds. The defining factor is if the procedure treats or prevents a disease.

The most common example of an ineligible expense is teeth whitening, as its purpose is aesthetic. Similarly, the application of veneers to change the shape or look of teeth for cosmetic reasons is not a permitted expense. These procedures are not seen as medically necessary and must be paid for with post-tax dollars.

Using HSA funds for a non-qualified expense can result in the withdrawn amount being included in your gross income and subject to a 20% penalty. An exception exists if a procedure is needed to improve a deformity from a congenital abnormality, an accident, or a disfiguring disease. In such cases, the work may be deemed medically necessary and become eligible.

How to Pay for Dental Care with Your HSA

When you have a qualified dental expense, there are two primary methods for using your HSA funds. The most direct way is to use the debit card linked to your HSA. Most HSA administrators provide a card that can be used at the point of service, just like any other debit card, to pay the dental office directly.

Alternatively, you can pay for the dental care out-of-pocket and then reimburse yourself from your HSA. This involves logging into your HSA account online and requesting a withdrawal or transfer to your personal bank account. This method provides flexibility but requires you to have the cash on hand for the initial expense.

Regardless of the payment method, record-keeping is a requirement. You must keep all documentation related to the expense in case of an IRS audit. This includes itemized receipts from the dental provider that detail the specific service performed and the date it occurred, and any Explanation of Benefits (EOB) statements from your dental insurance.