Does an FSA Cover Orthodontics?

A Flexible Spending Account (FSA) is an employer-sponsored benefit that allows individuals to set aside pre-tax money for eligible healthcare expenses. FSAs are designed to help manage out-of-pocket medical, dental, and vision expenses not covered by health insurance. The money contributed to an FSA is typically deducted from an employee’s paycheck before taxes are calculated.

Orthodontic Services Eligible for FSA Coverage

Orthodontic treatments are eligible expenses for FSA reimbursement when they address a medical or dental health issue. This includes procedures that correct misaligned teeth or bite problems affecting oral function or overall health. Common eligible services include traditional braces, clear aligners such as Invisalign, and retainers used as part of a comprehensive treatment plan.

Diagnostic services, like X-rays and dental impressions, are also covered when they contribute to a medically necessary orthodontic treatment. Procedures performed purely for cosmetic enhancement, such as teeth whitening or veneers, are not eligible for FSA coverage.

If an orthodontic issue leads to difficulties with chewing, speaking, or contributes to other dental problems like decay or gum disease, it qualifies. An orthodontist can help determine if a specific treatment is primarily for health rather than aesthetic improvement, which is key for FSA eligibility.

FSA Reimbursement Process for Orthodontics

Utilizing an FSA for orthodontic expenses involves a reimbursement process, initiated after the service or payment has occurred. To receive reimbursement, individuals must submit a claim to their FSA administrator, which can be done through an online portal, mail, or fax. The claim must be supported by documentation verifying the expense’s eligibility.

Required documentation includes an itemized receipt or a statement from the orthodontist detailing the service, date, cost, and patient’s name. An Explanation of Benefits (EOB) from an insurance provider is also recommended if insurance covered a portion of the cost, to clarify the out-of-pocket amount claimed from the FSA.

For orthodontic treatments, prepayment for services can be reimbursed, unlike most other medical expenses. A lump-sum payment for a treatment plan can be claimed upfront, provided the FSA plan allows for it. If a payment plan is chosen, each installment is reimbursed as it is paid.

Managing Orthodontic Payments Across FSA Plan Years

Orthodontic treatment often spans multiple years, presenting a unique situation for managing FSA funds due to the “use it or lose it” rule. This rule dictates that any unspent funds remaining at the end of the plan year are generally forfeited to the employer. However, employers may offer either a grace period or a carryover option.

A grace period allows an extension of up to two and a half months into the new plan year to use the previous year’s funds for new expenses. Alternatively, a carryover option permits individuals to roll over a limited amount from one plan year to the next. Employers can offer one of these options, but not both.

For multi-year orthodontic treatments, individuals can strategically align payments with their FSA contributions. This might involve making a significant upfront payment at the start of a plan year to maximize the use of current FSA funds. Alternatively, if the orthodontist offers a payment plan, monthly installments can be timed to align with annual FSA allocations, allowing for consistent reimbursement throughout the treatment duration.