New Trump HSA plans could be a boon for dental
Proposed HSA guidelines could impact dental care
With the blur of activity and headlines in Washington regarding the possible repeal and replacement of Obamacare, there are some interesting proposals regarding Health Savings Accounts that could have a positive effect for dental services. Let’s take a look at the possible ramifications of the new HSA proposals in Congress.
Health Savings Accounts explained
Heath Savings Accounts or HSAs have been around for many years. HSAs are tax favored savings accounts that are paired with high deductible health plans or HDHPs. HSAs feature a triple tax savings. Members are allowed to deposit funds into a savings account on a pre-tax basis and funds are allowed to grow tax free. HSA funds are then eligible to be spent on medical expenses on a tax free basis. However there is a tax penalty of 20% for any funds that are used on non-medical expenses, unless a member is age 65 or older.
The basic idea of HSA accounts is to give members tax incentives to save money for medical services that they may need in the future. And when members reach retirement age, they can use the accrued funds to spend on medical services or any other expense they choose.
HSA funds can be used for dental services
A less known feature of HSAs is that funds are also eligible to be used for dental services on a tax free basis. Current law and guidelines allow funds in someone’s HSA account to be used for any medical, dental, or vision services.
This can be a great benefit for anyone who has an HSA account and needs major dental work such as crowns, root canals, or dental implants. Dental insurance has many benefits, but typically covers only a portion of total out of pocket expenses. So major dental treatments often require members to come up with additional out of pocket costs. Funds in HSA accounts can be a great resource to use when dental expenses arise.
Proposed enhancements for HSA accounts
Now to the proposed changes that lawmakers are introducing. One of the proposals that has been discussed by Republicans in Washington is to increase the eligible amount of HSA contributions per year. Currently in 2017, individuals are able to contribute up to $3,400 per year, while families can contribute up to 6,750 for the year.
Lawmakers are considering an increase to these levels that would allow individuals to contribute up to $6,550 a year and families up to $13,100 a year. These increased contribution levels would allow members to set aside additional money on a tax free basis to use for medical or dental services. Members that take advantage of these new contribution levels would have access to necessary funds if unexpected dental or medical treatments are needed.
Will HSAs be expanded beyond high deductible health plans?
Another rumored change to is to allow HSAs to be paired with other types of health plans in addition to high deductible health plans. Currently, members can only contribute to HSA accounts if they are enrolled in a HDHP. These medical plans generally have higher deductibles and do not include any co-pays for doctors visits or prescription drugs. If Congress makes changes to open up HSAs to be paired with additional types of health plans, then we could definitely see an increase in the use and popularity of HSA plans. This would mean that more members could get access to the great tax benefits of utilizing HSA funds for their medical and dental expenses.
Health reform will continue
At this point, there are many proposals and possibilities about what may happen with an Obamacare repeal and the specifics of any replacement plan. While there are many possible outcomes, we’ll have to continue to monitor news in Washington to see what proposals make it into any final legislation that would be passed.
In the meantime, we can be confident that HSAs are here to stay, and are likely to be expanded in the future. Contributing funds to a health savings account can be a great investment for your health, and a great way to help pay for any dental or medical expenses you may need in the future.
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