Flexible Spending Accounts....
also known as Section 125 Benefit Plans, Cafeteria Plans, Flexible Benefit Plans or simply Flex, are one of the most dramatic developments in employee benefit plan design in recent years.
What is a Flexible Spending Account?
It is a benefit plan, established under Section 125 of the Internal Revenue Code that allows employees to pay for certain qualified benefits (such as dental care) with pretax dollars. This means the employee's cost of these certain benefits are paid from their salary before taxes (FICA, Federal, and in most cases State taxes) are calculated. This can result in lower tax liability (both for the employee and employer) and more take home pay.
A Flexible Spending Account allows an employee to set up individual accounts used to pay for unreimbursed dental expenses with pretax dollars.
If you're interested in learning more about Flexible Spending Accounts ask your employer.
Traditional Dental Benefits....
"Usual, Customary and Reasonable" (UCR) programs usually allow patients to go to the dentist of their choice. These plans pay a set percentage of the dentist's fee or the plan administrator's "reasonable" or "customary" fee. These limits are the result of a contract between the plan purchaser and the third-party payer. Although these limits are called "customary," they may or may not accurately reflect the fees that area dentists charge. These plans typically pay as the dental work is completed.
Table or Schedule of Allowance programs determine a list of covered services with an assigned dollar amount. That dollar amount represents just how much the plan will pay for those services that are covered. Most often, it does not represent the dentist's full charge for those services. The patient pays the difference.
Contact your employer to see if you are eligible for traditional dental benefits.
Direct Reimbursement....
Under this self-funded plan, an employer or company sponsor pays for dental care with its own funds, rather than paying premiums to an insurance carrier or third party. The patient pays the dentist directly and, once furnished with a receipt showing payment and services received, the employer reimburses the employee a fixed percentage of the dental care costs. The plan may limit the amount of dollars an employee can spend on dental care within a given year, but often places no limit on services provided. Patients can select their own dentist and, in conjunction with the dentist, play an active role in planning the treatment most appropriate and affordable to ensure optimum oral health.
For more information, ask your dentist.
MSA's....
A 1996 law allows self-employed individuals and workers at firms with less than 50 employees to use a new form of savings account that is tax-deductible to pay dental and medical expenses.
The medical savings accounts, or MSAs, can be carried over year to year and accumulate interest tax-free. (In a flexible-spending account, money left unused at the end of a year is forfeited by the taxpayer.) MSA deposits remain tax-exempt as long as they are used to cover dental, medical or, after the taxpayer reaches 59 1/2.
An MSA must be paired with a high-deductible "catastrophic" health policy. Users will pay their first few thousand dollars of health expenses from the money in the savings accounts, cover the next several hundred from their own pockets, and receive 100% reimbursement for expenses exceeding the deductible.
MSAs have two elements. The high-deductible catastrophic insurance policy would cover 100% of all dental or medical costs over a threshold set at $1,500 to $2,250 a year for individuals and $3,000 to $4,500 for families.
Policyholders would be permitted to deposit up to 65% of that deductible in a savings account (families would be allowed 75% of the deductible), and subtract that sum from their taxable income for the year. In other words, if a family bought a catastrophic policy with a $3,000 deductible, it could open an MSA with up to $2,250. For a family in the 28% tax bracket, the tax savings would be $630 a year.
For more information contact your independent insurance agent or broker.
Credit Cards....
Most general dentists and dental specialists accept major credit cards. Many dental specialists offer their patients payment plans.
Commercial Dental Financing Plans....
Most general dentists and dental specialists have commercial financing plans available. These financing companies do require a credit application and offer several payment plans.
The material provided within is for informational purposes only. Please contact your employer, tax advisor, or independent insurance professional for the current plans and tax regulations.
