Is the out-of-pocket cost for a new dental crown an acceptable expense for an HSA, if I already have dental insurance? If it is "denied" as an acceptable expense, what happens?
I went to the dentist for my checkup this week and it turns out I need to get a new crown -- a filling broke in a tooth that has 3 fillings in it, and my dentist doesn't think there's enough tooth left to fix the filling. I have dental insurance through my employer, which will pay for half. I will have an out-of-pocket cost of $504 (according to a written estimate from my dentist). Money is tight for me right now, and I want to avoid taking that out of savings if I can.
For health insurance, I have an HSA/HDHP combination through my employer, with a deductible of $1,200 on the HDHP. By the time I go in to get the crown, I will have about $1,800 in my HSA. Therefore, I figure if I can pay for the out-of-pocket costs with my HSA, I will still have enough in the HSA to cover that deductible in the event of catastrophic medical needs.
So now I need to find out if it's a qualified expense. My health insurance company's website referred me to IRS Publication 502, which states:
You can include in medical expenses the amounts you pay for the prevention and alleviation of dental disease. Pre-treatment includes the services of a dental hygienist or dentist for such procedures as teeth cleaning, application of sealants, and fluoride treatments to prevent tooth decay. Treatment to alleviate dental disease include services of a dentist for procedures such as X-rays, fillings, braces, extractions, dentures, and other dental ailments. But see Teeth Whitening under What Expenses Are Not Includible, later.
I would think this falls under the very vague category of "other dental ailments," however, I'm not entirely sure.
My Google-Fu led me here
-- which seems to indicate that yes, it is allowed -- though I'm not sure if that applies to a specific HSA or to HSAs in general.
I've been with my current employer for about a year now and this is the first job where I've been forced into an HSA/HDHP setup. I'm fairly healthy, and therefore this is the first time I will have used the HSA, so I'm not quite familiar with how it works yet. Can I still use the HSA, even though my dental insurance will be paying for half the cost of the crown?
My understanding is that if it is not an allowable expense, then I will need to pay income taxes (federal, state, and county) on the $504. Is that correct? If it is, I'm probably better off paying it out of my savings account -- money which has already been taxed.