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The Internal Revenue Service wants to create a tax incentive to help families purchase dental coverage.
The Internal Revenue Service (IRS) has filed for a rule change to the Affordable Care Act (ACA) that would help expand dental coverage to millions of pediatric patients by helping to reduce the financial challenges their families face when purchasing dental coverage. Currently, the ACA offers both healthcare and dental plans separately through some exchanges, allowing families to purchase one type of plan without also purchasing the other.
Only about one-third of presently offered healthcare plans also include dental coverage for children. As a part of the passage of the ACA in 2010, pediatric dental coverage was listed among 10 “essential healthcare benefits” all Americans are entitled to receive when purchasing a healthcare plan.
Since dental benefits are typically sold separately from other healthcare benefits, many families have to deal with the financial burden of purchasing stand-alone dental plans that usually don’t benefit from any kind of tax credit. Under the existing law, qualified health plans that don’t offer any kind of pediatric dental benefit are usually cheaper than plans that do. The existing tax credits typically don’t offset the cost of purchasing separate, stand-alone dental coverage for children, and many families choose to forgo this coverage because of the expense.
In the proposed rule change, the IRS would adjust how tax credits are actually calculated to help more of the credits apply to stand-alone pediatric dental plans. The new rule would take effect in 2019 — families who purchase both a health plan that doesn’t include pediatric dental coverage and a stand-alone dental plan for their children would be eligible for a tax credit based on the premiums paid for both the health plan and the stand-alone dental plan.
Several groups have been lobbying for such a tax rule change since 2012, when information outlining the calculations of tax credits was made publicly available. The United States Treasury was petitioned in 2013 by the American Dental Association, the National Association of Dental Plans, the Delta Dental Plans Association and the Children’s Dental Health Project to help make coverage more affordable. According to their letter sent in September 2013, changing the tax credit on purchase of stand-alone dental plans would help to “provide oral health services to vulnerable children who need them” by helping to “act as an incentive to purchase coverage.”
By changing the tax rule, the IRS could help to remove some of the financial difficulty families face when purchasing dental coverage for their children. No matter how pediatric dental plans are purchased, families could get the maximum amount of tax credits to which they are entitled.