If you do not have dental insurance, or your plan leaves big gaps, you have probably come across dental savings plans and wondered how they compare with the HSA or FSA you might already have through work. They are very different tools. A savings plan lowers the price you pay at participating dentists; an HSA or FSA lets you pay with pre-tax money. Many people can use both. This guide explains how each works, based on IRS rules, and how to decide. For how insurance compares with discount plans, see our earlier guide to dental insurance vs. discount plans.
Dental savings plans in brief
A dental savings plan, also called a discount plan, is a membership program. You pay a fee, and participating dentists agree to charge members reduced fees. It is not insurance: the plan does not pay the dentist, and you pay the discounted price yourself. Key points to check:
- Which dentists near you participate.
- The plan’s fee schedule for the procedures you are likely to need.
- Membership fees, any activation fees and renewal terms.
- Whether there are waiting periods or annual limits (many have none, but read the terms).
Our earlier guide covers these plans in more depth, so here we focus on how they compare with tax-advantaged accounts.
Health Savings Accounts (HSAs)
According to IRS Publication 969, to contribute to an HSA you must be covered by a high deductible health plan (HDHP), have no other disqualifying health coverage, not be enrolled in Medicare, and not be claimable as a dependent on someone else’s return. Contributions are tax-advantaged, earnings in the account are tax free, and distributions may be tax free when used for qualified medical expenses.
The IRS also describes an HSA as “portable”: it stays with you if you change employers or leave the workforce, and unused money stays in the account until you use it.
Health Flexible Spending Arrangements (FSAs)
A health FSA is offered through an employer. IRS Publication 969 explains that FSAs are generally “use-it-or-lose-it”: money left at the end of the plan year generally cannot be carried over. However, an employer’s plan may offer either a grace period of up to two and a half months after the plan year or a limited carryover. Your plan documents say which, if any, applies.
IRS Publication 969 states that qualified medical expenses for an FSA are those specified in the plan that would generally qualify for the medical and dental expense deduction.
Which dental expenses qualify
IRS Publication 502 says you can include amounts paid for the prevention and alleviation of dental disease. It gives examples:
- Preventive treatment: services of a dental hygienist or dentist such as teeth cleaning, application of sealants and fluoride treatments.
- Treatment of dental disease: services such as X-rays, fillings, braces, extractions and dentures.
Publication 502 also lists what does not count. Teeth whitening is explicitly excluded, and cosmetic procedures that are directed at improving appearance and do not meaningfully promote proper body function or treat disease generally cannot be included. That matters for veneers and cosmetic bonding, which may or may not qualify depending on the reason for treatment. Check with your plan administrator or a tax professional for specific procedures.
Side-by-side comparison
What it does
A savings plan reduces the price. An HSA or FSA changes what money you pay with, letting you use pre-tax dollars.
Who can get it
Savings plans are generally open to anyone who buys a membership. HSAs require HDHP coverage and other conditions (IRS Pub. 969). FSAs are available only through an employer that offers one.
What happens to unused money
Savings plans have no account balance; you only pay the membership fee. HSA funds stay with you. FSA funds are generally forfeited at year-end unless the plan offers a grace period or carryover.
Choice of dentist
Savings plans discount fees only at participating dentists. HSA and FSA funds can be used at any provider for qualifying expenses.
Cosmetic care
Some savings plans list discounts on cosmetic services. HSA and FSA funds generally cannot be used for whitening or purely cosmetic work under IRS Publication 502.
Using them together
Because they do different things, many people combine them: the savings plan lowers the fee, and an HSA or FSA pays that lower fee with pre-tax money. Whether the savings plan membership fee itself can be paid from an HSA or FSA is a separate question; ask your plan administrator rather than assuming.
How to decide
- Expecting major work this year? Get written estimates, then compare the savings plan’s fee schedule with your dentist’s regular fees. An FSA may help if you can predict the amount.
- Want flexibility over years? An HSA, if you are eligible, lets unused funds roll forward.
- Want a specific dentist? Check whether they participate in any savings plan before buying one.
- Have insurance with low annual maximums? Tax-advantaged accounts can help with costs above the maximum. See understanding dental insurance.
Find dentists near you, and ask which plans they accept, in our dentist directory. Our guide to finding a dentist that takes your insurance has more tips.
This article is general information, not tax or financial advice. Rules can change; check current IRS publications and your plan documents.
Frequently asked questions
Is a dental savings plan insurance?
No. It is a membership that gives you reduced fees at participating dentists. You pay the dentist directly.
Can I use my HSA for dental care?
Yes, for qualified expenses. IRS Publication 502 includes treatment to prevent and alleviate dental disease, such as cleanings, sealants, fluoride, fillings, braces, extractions and dentures.
Can I use HSA or FSA money for teeth whitening?
No. IRS Publication 502 says amounts paid to whiten teeth cannot be included.
What happens to unused FSA money?
IRS Publication 969 says FSAs are generally use-it-or-lose-it, though an employer plan may offer a grace period of up to two and a half months or a carryover.
Can I have a dental savings plan and an HSA?
Generally they serve different purposes and many people use both: the plan lowers the fee and the account pays it with pre-tax dollars. Check your plan rules.
Photo: olia danilevich / Pexels
Sources
- IRS Publication 502 – Medical and Dental Expenses
- IRS Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans
By the Dentist Review Editorial Team.
This is general information, not medical advice. Talk to a licensed dentist about your own situation. See our disclaimer.
