TECHNICAL GLOSSARY

Dental Insurance Premiums: Costs and Tax Deduction Guide

Monthly or yearly regular payments to a dental insurance provider are known as premiums. These premiums represent what you, or a family member, regularly pay to your dental insurance company for coverage of dental care such as preventive services, restorative treatments and surgical procedures. Most policies have specific monthly and/or yearly premiums associated with them.
A good understanding of your dental policy should help you budget for healthcare expenses and help you avoid paying more tax than is necessary.

Are Dental Insurance Premiums Tax-Deductible?

Under certain criteria, the cost of your dental insurance premiums may qualify as a tax-deductible expense. The Internal Revenue Service (IRS) states that if your dental insurance policy provides coverage for both preventative and curative dental services (i.e., routine cleanings/exams, fillings/crowns/placeholders etc.), then you can include those premiums in the list of eligible medical expenses when filing your taxes.

How the Deduction Works

To take itemized deductions on your federal tax return, follow these two steps:
Step 1:
Add up your total medical expenses for the year (but don't include dental insurance premiums).
Step 2:
You can only claim a deduction for medical expenses that exceed 7.5% of your adjusted gross income (AGI).
For example: If your AGI is $50,000, 7.5% of that amount would equal $3,750. Therefore, the only medical expenses that could be claimed as a deduction would be those in excess of $3,750 (i.e., including dental insurance).

Average Costs of Dental Insurance

• Monthly premiums usually average approximately $46 to $50 monthly
• Annual costs generally average between $600 and $2,000
• Costs may differ according to coverage type, size of family and whether state governments have rules regarding this type of benefit.

Additional Tax Issues

• Dental insurance premiums paid from an HRA or FSA might count as above-the-line deductions, which could help lower taxable income.
• Be sure to keep documentation of all premium payments and dental expenses as they are necessary to receive the above-the-line tax deduction.
• Consult IRS Publication 502 and/or a qualified tax professional for assistance with your eligibility and how to report your claim on your tax return.