Second Opinion: IRS rule change makes dental coverage more affordable

Colin Reusch of the Children's Dental Health Project offers some background on a proposed tax change that may help dental patients and dentists. Reusch offers background on the issue and how a wide range of dental organizations found common ground on this important issue of dental coverage.

On July 8, IRS released a proposed rule that the Children's Dental Health Project (CDHP) and its partners had sought for years. This new rule would ease the financial burden on many families purchasing coverage on the health insurance marketplaces starting in 2019. Here's a bit of background on the issue and why what the IRS has proposed is a win for children and families.

Colin Reusch, senior policy analyst, Children's Dental Health Project. Image courtesy of CDHP.

As the CDHP has previously noted, while the Patient Protection and Affordable Care Act (ACA) allows children's health and dental coverage to be offered separately, the IRS has, until now, interpreted the law in a way that makes it unlikely for families to receive a tax credit for standalone pediatric dental coverage. This rule represents a reversal of that interpretation and clarifies a process for accounting for the cost of children's dental coverage when calculating a family's premium tax credit amount.

Currently, only about a third of marketplace health plans include pediatric dental benefits and, in some marketplaces, pediatric dental coverage is only available through a standalone dental plan. This means that many families must purchase a separate dental plan to ensure that their children have the full range of essential health benefits identified by the ACA.

Unfortunately, when families eligible for premium tax credits choose or are essentially forced to purchase standalone pediatric dental coverage, their premium tax credit amount is based on the cost of the second-lowest cost silver health plan in the marketplace, but it does not account for the fact they are paying an additional premium for dental coverage.

Thanks to more than three years of advocacy efforts by the children's health community, the American Dental Association, and the dental insurance industry, this newly proposed rule seeks to address this glitch by changing the way that premium tax credit amounts are calculated.

Starting in 2019, families purchasing both a health plan that does not include pediatric dental coverage and a standalone pediatric dental plan would receive a tax credit amount based on the premiums of both a benchmark health plan and a benchmark dental plan. This ensures that all families eligible for premium tax credits get the full amount to which they are entitled, regardless of how they purchase their children's dental coverage.

While this proposed rule does not remove all financial barriers associated with marketplace dental coverage, CDHP is pleased that the administration has heard its concerns and is moving to make access to affordable dental coverage a little easier for families and children.

Colin Reusch is a senior policy analyst at the Children's Dental Health Project in Washington, DC.

A version of this Second Opinion first ran on the CDHP's website. DrBicuspid.com appreciates being able to bring this to our audience.

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