Preventative dentistry is not only just a smart money saving maneuver, the behavior is also essential to maintaining general well-being. Financially strapped consumers looking to fund the expense should consider opening up a health savings account (HSA).
2009 marked the first time in 50 years that dental care spending decreased and Great Recession has been cited as the cause for the reduction. The Centers for Disease Control and Prevention has noted that the "...primary indicator of access to dental care in the United States is dental insurance," and since approximately 45 million people under the age of 65 do not have coverage, a HSA is the best tool for consumers to utilize in order to afford the dental care needed.
HSAs are a specialized savings account that allows consumers to save and pay for medical expenses on a tax-free basis and professional dental care is just one of the qualified costs. The Internal Revenue Service allows the money saved in an HSA to be utilized for "preventive treatment includes the services of a dental hygienist or dentist for such procedures as teeth cleaning, the application of sealants and fluoride treatments to prevent tooth decay. Treatment to alleviate dental disease includes professional dental services such as X-rays, fillings, braces, and tooth extractions
In order to legally open and maintain a HSA, individuals must have a high-deductible medical insurance plan with minimum annual deductibles of $1,200 per person or $2,400 for families. Medicaid applicants and recipients cannot open the savings account. For 2010, the maximum annual deductible for individuals was $3,050 and $6,150 for families. However, individuals over the age of 55 couls make and additional $1,000 in HSA contributions in order to offset medical expenses.
While some employers allow individuals to set up HSA through their payroll, individuals can also choose to open HSAs on their own as their are hundreds of options for the specialty accounts. Individuals who opt to create their own HSA can find high interest accounts, options providing compounded interest rate or accounts that allows the individual to decide how the saved money is invested. Once accounts are established, individuals can save the money on a pre-tax basis in order to reduce the amount of income claimed on taxes. Typically, HSA accounts offer consumers a higher rate of return on their savings and that interest is tax-free.
HSAs have existed for less than a decade and only came to light when President Bush approved the devices in conjunction with the Medicare Bill reforms in 2003. According to the U.S. Treasury HSAs have been designed "... to help individuals save for future qualified medical and retiree health expenses on a tax-free basis," (http://www.treasury.gov/resource-center/tax-policy/Pages/Health-Savings-Accounts.aspx). The tools were designed to assist the 10 million Americans who have opted into high-deductible insurance.
Since that time, individuals have saved over $8.6 billion for medical and dental emergency expenses. Reuters has reported that eventually the HSA banking niche will accrue assets in the $50 billion to $100 billion range.
Money saved in an HSA can be applied towards preventative dentistry as well as restorative dentistry. Cosmetic dentistry is considered optional, and therefore does not fall under the guise of qualified HSA expenses. Consumers simply need to pay the dentist directly from the HSA. Upon tax filing, all the money deposited into an HSA will be tax deductible. Individuals need to include that total on their 1040 form, line 25 on the front of the paperwork.