Our company has a high deductible health insurance plan and an HSA to go along with it that the company and employees both contribute to. A few of the employees have purchased supplemental dental policies through Aflac since our health plan doesn't cover dental. The question and following discussions came up on whether the HSA can be used to pay for dental expenses that may be reimbursable from Aflac. I can't seem to find a definitive answer.

It is my understanding that if you are reimbursed for any expenses, then you will not be able to draw those expenses from you deductible. That being said, if the reimbursement does not fully cover your expenses, then the balance can be charged toward the deductible. Once again, check with your insurance provider for full details.

Hope this helps!

Thanks for your help, but I'm referring more towards the HSA account rather than the deductible. Since we don't have dental I know that we can't apply any dental work to the deductible. The issue is whether we can use our HSAs to pay for dental work if the employee has Aflac Dental insurance, which doesn't have a deductible to begin with but does reimburse the employee. We've had discussions regarding this with some saying we can use our HSAs and some saying we can't if the employee is covered by another insurance.

According to the federal regulations for HSAs, you can pay for dental, vision, chiropractic, accupuncture, etc... our of your HSA. You can reimburse yourself out of your HSA for any dental expenses that you incur above and beyond that which Aflac will reimburse you. For example, if your dental bill is $100 and Aflac reimburses you $75, then you can reimburse yourself the additional $25 from your HSA.

Hopefully, this helps. Also, please ask your insurance broker exactly what your policy states so that there will not be any misunderstandings.

You can use your HSA to pay for unreimbursed dental. I think some of the confusion is coming from the discussion your employees (I'm talking to smparsons) are having around whether or not merely having the dental coverage messes them up for HSA purposes. It doesn't. I'll be specific. In order to contribute to an HSA, you have to meet 4 requirements - enrolled in an HDHP, not enrolled in Medicare, not a dependent, and not enrolled in other non-HDHP insurance. The dental coverage you are referencing does NOT exclude you from meeting this 4th requirement. The IRS isn't looking at dental when they are talking about HDHPs. (I think that that's where some of your employees' confusion is coming from.) Those are the contribution rules.

Now, when it comes to distributions from the HSA, there are no such 4 qualifications. Again, that's just for contributions. No matter how you slice it...as long as you haven't already been reimbursed for the dental expenses, you can reimburse them from your HSA.

Sandman and AChambers are both correct. Each employee can "spend" their HSA dollars on any eligible 213(d) expense, as long as part or all of that expense has not been reimbursed through insurance. It sounds like you are understanding the HSA benefit/account to only be accessible if it is tied into a deductible, which is incorrect. You are even able to use your HSA dollars to pay for eligible dependents medical out-of-pocket expenses, whether or not they are participating in a qualified HDHP!

Your employees may want to consider skipping the supplemental dental insurance and instead put those premiums into the HSA and self-insuring the dental expenses with tax free dollars.