Do HSAs Cover Dental Expenses & What Qualifies?

A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals save and pay for eligible healthcare expenses. It is typically paired with a high-deductible health plan (HDHP), allowing funds to be contributed on a pre-tax basis, grow tax-free, and be withdrawn tax-free for qualified medical costs.

Qualifying Dental Expenses

Many dental services, treatments, and products are considered qualified medical expenses by the IRS for HSA purposes. These expenses must be for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. Routine preventive care, such as dental cleanings, check-ups, and X-rays, are eligible expenses.

Restorative procedures like fillings, root canals, and extractions qualify. Major procedures such as crowns, bridges, dentures, and dental implants are covered if they address a medical or functional need. Orthodontic treatments, including traditional braces and clear aligners, are eligible when recommended by a dentist or orthodontist to correct dental issues like a misaligned bite. Additionally, prescription medications for dental pain or infection are considered qualified expenses.

Non-Qualifying Dental Expenses

Certain dental expenses are not qualified because they are primarily for general health or cosmetic purposes. Products for routine oral hygiene, such as toothbrushes, toothpaste, and floss, are ineligible. Mouthwash and non-prescription medicines for general use also fall into this category.

Cosmetic dental procedures like teeth whitening are not covered. Veneers do not qualify unless medically necessary to repair damage from an accident or disease, rather than solely for aesthetic enhancement. The distinction hinges on whether the expense treats a medical condition or is solely for appearance.

Process for Using Your HSA

Using your HSA for dental expenses involves practical steps to ensure proper payment and record-keeping. Many HSA providers issue a debit card, which can be used directly at the time of service, similar to a regular debit card. If a provider does not accept the HSA debit card, or if you prefer, you can pay for the dental expense out-of-pocket and then reimburse yourself from your HSA. This reimbursement can be done by transferring funds to your personal bank account or withdrawing cash.

Maintaining accurate records is important for HSA transactions, as the IRS requires documentation for qualified medical expenses. You should keep itemized receipts, invoices, and Explanation of Benefits (EOB) statements from your dental insurance provider. These records are important in case of an IRS audit; retain them for at least as long as your tax return is subject to audit, typically several years.

If HSA funds are used for non-qualified expenses before age 65, the withdrawn amount becomes subject to ordinary income tax and an additional 20% penalty. This penalty is waived for individuals aged 65 or older or those with a disability, though the withdrawal remains taxable income if not used for qualified medical expenses. Always verifying eligibility and maintaining documentation helps avoid potential tax complications.