A rule change that would make dental coverage more affordable

By: Colin Reusch

This week, the Internal Revenue Service (IRS) has released a proposed rule that 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.

As CDHP has previously noted, while the 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 stand-alone 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.

Until now, the IRS has interpreted the ACA in a way that makes it unlikely for families to receive a tax credit for stand-alone pediatric dental coverage.

Currently, only about one-third of marketplace health plans include pediatric dental benefits and in some marketplaces, pediatric dental coverage is only available through a stand-alone dental plan. This means that many families must purchase a separate dental plan in order 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 stand-alone 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 stand-alone pediatric dental plan would receive a tax credit amount based upon 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 our concerns and is moving to make access to affordable dental coverage a little easier for families and children.

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children ages 6-12 suffered a toothache in the previous six months.
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