Does FSA Cover Braces and Orthodontic Treatment?

A Flexible Spending Account (FSA) offers a tax-advantaged way to pay for eligible medical expenses. Understanding how these accounts work, especially for specialized treatments like orthodontics, helps individuals maximize their benefits. This article clarifies the eligibility of orthodontic treatments for FSA reimbursement and outlines steps for utilizing these funds.

Understanding Flexible Spending Accounts

A Flexible Spending Account (FSA) is an employer-sponsored benefit allowing employees to set aside pre-tax money for qualified medical expenses. This pre-tax contribution reduces taxable income. Funds can be used for a wide range of healthcare services and products, including deductibles, co-payments, and prescription medications.

FSAs operate on a plan year and generally adhere to a “use-it-or-lose-it” rule. This means any unspent funds at the end of the plan year are usually forfeited to the employer. However, employers can offer flexibilities like a grace period or a carryover option to mitigate this rule.

FSA Coverage for Orthodontic Treatment

Orthodontic treatments, including braces, are eligible expenses for FSA reimbursement when they address a medical necessity rather than purely cosmetic concerns. Medically necessary orthodontics corrects issues like bite problems, alignment affecting oral health, or craniofacial abnormalities. Conditions such as congenitally missing teeth or cleft lip defects are also considered medically necessary.

Eligible costs include initial consultations, X-rays, impressions, the braces themselves (traditional or clear aligners), ongoing adjustments, and retainers. The IRS considers these qualified medical costs, making them suitable for FSA use. Only the portion of orthodontic payments not covered by dental insurance or other plans can be reimbursed through an FSA.

Submitting FSA Claims for Braces

To receive reimbursement for orthodontic expenses, individuals must submit documentation to their FSA administrator. This involves itemized bills or receipts from the orthodontist, clearly stating the vendor name, date of service, type of service, and amount charged. An Explanation of Benefits (EOB) from an insurance provider can also serve as sufficient documentation if it contains the required information. Keep thorough records of all payments and services.

For larger or multi-year orthodontic treatment plans, the FSA administrator may request a detailed treatment plan or a letter of medical necessity from the orthodontist. Many FSA plans offer a debit card for direct payment at the time of service, simplifying the process. Alternatively, claims can be submitted online through a participant portal, via fax, or by mail, with processing times ranging from one to seven business days.

Important FSA Rules for Orthodontic Care

Understanding an employer’s FSA plan rules is key, particularly for long-term treatments like orthodontics. For 2025, the maximum employee contribution to an FSA through payroll deductions is $3,300. If an employee’s spouse also has an FSA, they can each contribute up to this limit, potentially doubling the household’s total pre-tax contributions.

Given the “use-it-or-lose-it” rule, employers can offer a grace period or a carryover option for flexibility. A grace period extends the time to use funds up to two and a half months after the plan year ends. A carryover option allows participants to roll over a limited amount of unused funds into the next plan year, with the maximum carryover for 2025 being $660. This carryover does not impact the maximum contribution limit for the new plan year. Orthodontic payments, especially pre-paid services, can be reimbursed based on the date of payment, which is an exception to the usual IRS rule.