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Smart Financial Planning Can Reduce the Cost of Braces

A new year is beginning, and if anyone in your family will need braces in the next year or two this is a good time to begin planning.


With a bit of strategic preparation, you may be able to greatly reduce your out-of-pocket costs.


You can also plan to gain the greatest tax benefits.


Here are a few things to consider in order to maximize your resources so that orthodontic treatment has the lowest impact on your bank account.



Insurance


Every insurance plan is different so you will need to learn the specifics of your plan, but here is some basic information that is helpful to understand.


Employers determine your orthodontic benefits. Thankfully, most employers are now including coverage for dependent children and adults. Remember, orthodontic treatment is not about vanity, it is about the long-term health of your teeth and the supporting gums and bones. Early orthodontic screenings will help prepare you to select the dental and orthodontic coverage that suits your needs and your child’s needs.


Unlike some dental treatment, either your employer elects to include orthodontic benefits or they don’t, and you may choose whether or not to have the additional coverage. Again, this insurance coverage is determined by your employer, not the insurance company. It is important to review your coverage elections and understand your insurance benefits. At Jungle Roots, if you have a question about your coverage, we can’t provide you a guarantee of your dental or orthodontic coverages, but we can guarantee we will do our best to guide you in understanding your plan and what coverages may best suit your needs.


Most dental insurance plans require that you pay a deductible before they begin to pay for anything other than preventive dental care. This amount may be as low as $50 but may also be higher. A deductible with your orthodontic benefit is not unheard of, but it is less common.


Orthodontic benefits are usually a separate benefit and typically they do not renew every year like your general dental benefits. Like all dental plans, a percentage of orthodontic treatment is covered, and you pay the remaining amount. Orthodontic benefits usually have a lifetime maximum per person. So, even if the insurance company pays 50%, once you reach the lifetime maximum you are responsible for the remaining amount. The same goes for the annual limit if that is the type of plan you have through your employer. Once it is reached, you are responsible for the remaining amount that year.


Side note: Review your policy to discover the definition of when the year begins. Some policies view a year as being January 1 through December 31, but others start the year on the date that the policy went into effect.


Some plans also require you to wait a specific amount of time before you can use any orthodontic benefits and they may have minimum and maximum age limits. This is common for individually purchased plans and supplemental insurance. Most waiting periods are either one year or six months, depending on the procedure.


Additionally, before signing up for a secondary insurance plan, make sure the secondary plan does not have a non-duplication of benefits clause. If your secondary plan has a non-duplication of benefits clause, they will not pay for services already covered by your primary plan. Lastly, please remember that the standard primary and secondary benefits for your dependents are determined by the birth month of the persons carrying the insurance. For example, if your birthday is 4/12/1967 and your spouse’s birthday is 10/18/1961, you will be considered the primary insurance holder for your dependent children because April comes first in the calendar year. The only exception to the birthday rule may be overridden by a legal document such as a divorce decree.


Most insurance plans that you purchase through an employer or a state marketplace have a specific window of time each year in which you can make changes to your plan. This is one reason to begin planning ahead. It would be sad to discover that you missed the cutoff to make changes, and either end up paying more or having to wait another year to take advantage of your benefits. Please keep in mind that there are certain life-changing events that allow you to make changes to your benefits. Please speak to your human resources team to determine what events may pertain to your individual needs.


If you consider changing dental insurance plans or you change jobs after orthodontic treatments have begun, be sure that the new plan will cover the remaining treatment. This is called “treatment in progress” and there are plans that don’t cover treatment that was started before the plan went into effect.


At Jungle Roots, we participate in the following dental networks: Cigna DPPO, MetLife PDP PLUS, Delta Dental, Aetna, Guardian, Sun Life, Humana, Careington, Dentamax, and Maverist, including insurance companies under the Careington, Dentamax, and Maverist Umbrella. We also accept any PPO insurance provider and are prepared to work with any insurance company that will assign benefits to Jungle Roots as your provider.


Payment Plans and Care Credit


Our team is prepared to customize payment options for your situation. We also accept Care Credit to help offer the maximum amount of flexible payment options available. Care Credit offers shorter-term financing for medical expenses. The benefit of using Care Credit rather than a credit card is that if you charge more than $200, make your payments on time, and pay the full amount due by the end of the promotional period, they do not charge interest.


Medical Expenses and Federal Taxes


This information is accurate as of December 2019. You can go to the IRS website to see if there have been any changes or speak with your tax preparer.


Braces are considered to be medically necessary, which means they are a tax-deductible expense. However, this does not mean that you automatically get to write them off. In order to use medical and dental care as a federal tax deduction, a few things are required.


  1. You have to itemize your deductions. This means you do not take the standard deduction, and you have to keep track of all the expenses that you plan to write off. If your itemized deductions are lower than the standard deduction, then it is not worth itemizing.

  2. You can only deduct the amount of your total medical expenses that exceeds 7.5% of your adjusted gross income (AGI). For example, if your AGI is $45,000, your total out-of-pocket medical expenses must be more than $3,375 before you can begin deducting them.


This is where planning becomes beneficial. If you have three preteens, and all of them are going to need braces, it could help to save for a year or two and get braces for all of them at the same time. This could bring your medical expenses above the limit and help you get a bigger tax deduction in the years they are being treated.


The good news is that all medical expenses for you, your spouse, and any dependent claimed on your taxes can be included as medical expenses. Here are some things that can be included as a Federal Tax deduction for medical expenses.


  • Payments made to a medical professional for medical treatment. Dental and orthodontic care that is medically necessary is included in this. (Whitening treatments and veneers are not medically necessary, but orthodontic treatment usually is.)

  • Any premiums you pay for dental insurance or supplemental insurance. (Payments that your employer makes, or that you are reimbursed for cannot be included.)

  • Any amount you pay for transportation for medical care. For the 2019 tax return, the standard mileage rate is 20 cents per mile driven for medical purposes. If you live 20 miles away and visit the orthodontist every month for two years, this is definitely worth adding into your medical deductions.


Note: You only deduct payments in the year they are paid, not when treatment is received. If you make a payment in December 2019 for orthodontic treatment that will be received in January 2020, that payment is deducted on your 2019 tax return. This is important to note when calculating the total medical expense deduction.


State Taxes


Each state handles medical expenses differently, so you should look into the tax laws of the state where you file. If you file taxes in the state of Arizona, “Arizona itemized deductions are the same as the federal itemized deductions except all qualified medical expenses are allowed.” This means that if you itemize deductions on your Arizona state tax return, you can deduct all your medical expenses, not just those that are over 7.5% of your AGI as required for your federal tax medical deduction.


HSA and FSA Accounts


These are an excellent resource for saving money on taxes. Any contribution reduces your taxable income. In 2020, the maximum contribution for an HSA account is $3,550 for a single person and $7,100 for a family. HSA funds do not expire. So, even if no one in your family plans to get braces in the next year, you can still contribute the maximum amount this year, and use it to pay for braces over the next few years.


The FSA contribution maximum for 2020 is $2,750. It is important to note that you can only role over $500 from an FSA account into the next year. This means that you only want to contribute $500 more than you plan to need in 2020.


While this may seem like a lot to consider, we are here to help you understand the financial side of getting braces. Not only do we offer a complimentary orthodontic screening, but we also provide a complimentary benefits check before you arrive for your screening. Our team is highly trained to help you understand your benefits and answer any question you have about your dental insurance plan. While we cannot take the place of your tax advisor, we can walk you through financial planning to make the most of your dental plan, FSA, and HSA benefits and your medical deductions. With a bit of planning and strategizing, you can definitely reduce the financial impact of braces, so that your family can enjoy a lifetime of healthy, well-aligned smiles. We hope you have a wonderful New Year and look forward to helping you and your family in 2020!


Call us at (480) 759-1119



At Jungle Roots Children’s Dentistry & Orthodontics, we strive to provide the highest comprehensive pediatric and orthodontic dental care in a unique, fun-filled environment staffed by a team of caring, energetic professionals. We believe the establishment of a “dental home” at an early age is the key to a lifetime of positive visits to the dentist. Ahwatukee, Phoenix



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