A Retirement Cost You May Be Overlooking

When people map out retirement spending, one expense often gets shortchanged: dental care. In discussions with older adults about life after work, the cost of keeping up with oral health comes up again and again. That’s not surprising. Teeth tend to deteriorate with age, but Medicare generally does not pay for routine dental work, aside from emergency procedures for hospitalized patients.

Retirees usually have three ways to handle dental bills: buy dental insurance, enroll in a Medicare Advantage plan that includes dental benefits, or pay the costs themselves.

Choosing stand-alone dental insurance

Standalone dental policies are available to older adults, with monthly premiums often running about $25 to $50. But the coverage can be limited. Many plans cap annual benefits at somewhere between $1,000 and $2,500, which offers little protection against expensive work. Waiting periods are also common, and some plans do not cover major procedures such as crowns or root canals until six to 12 months after enrollment.

These policies also usually require you to use certain providers. Dental health maintenance organizations are typically the most restrictive, although they are also usually the least expensive.

In the end, premiums plus benefit caps often make dental insurance a weak financial deal in retirement. Still, one important argument in its favor is that people without coverage are more likely to skip dental care, according to Medical Expenditure Panel Survey data.

Using Medicare Advantage for dental care

Many Medicare Advantage plans include dental coverage, and some also offer vision benefits and hearing aids. Because Medicare Advantage is the private, managed-care version of Medicare, enrollees must choose from an approved provider list, so it may not be a good fit if you want to keep seeing a specific dentist who is not in the network.

That said, dental benefits should not be the main reason someone picks Medicare Advantage over traditional Medicare paired with a supplemental plan. Medicare Advantage can be less expensive, but out-of-pocket costs may still be substantial. Networks can be restrictive, referrals may be required for specialists, and people who later want to move from Medicare Advantage to traditional Medicare may face medical underwriting when seeking Medigap coverage.

The takeaway is that dental coverage should be a secondary consideration when choosing retirement healthcare coverage. If Medicare Advantage already fits your needs, then dental benefits can be viewed as a bonus.

Paying for dental care yourself

If you plan to self-fund dental expenses, it helps to estimate what you may owe. Review your dental spending from the past five years, leaving insurance out of the calculation, and include routine preventive care. Your dentist can also provide pricing for common procedures.

It is also smart to discuss any likely near-term procedures with your dentist. That can help you decide whether to complete them while you are still working and covered by insurance or wait until retirement.

Health savings accounts are especially useful for dental costs in retirement. Most dental work, aside from cosmetic procedures, can be paid with tax-free HSA withdrawals. It is also wise to use HSA money during your lifetime, or your spouse’s lifetime, because the tax break effectively ends at death; withdrawals by nonspouse beneficiaries are taxed as ordinary income.

Another possibility is claiming a tax deduction if major dental bills happen in the same year as other large medical expenses. Dental costs can be counted along with other healthcare spending for deduction purposes. Even so, only medical expenses above 7.5% of adjusted gross income are deductible, and many older adults may benefit more from the standard deduction, especially with the higher standard deduction and the new senior deduction.

The bottom line: For retirees with enough assets, paying dental costs out of pocket instead of buying insurance can make sense and can give them more freedom to choose providers.

Once premiums and annual caps are taken into account, insurance may not save much more than self-funding. Some dentists may even offer a discount if you are not using insurance.

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This article was provided to The Associated Press by Morningstar. For more retirement content, go to https://www.morningstar.com/retirement.

Christine Benz is director of personal finance and retirement planning for Morningstar and co-host of The Long View podcast. Subscribe to her free newsletter, Improving Your Finances.

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