budgets | Financial Crooks

Recently, I reviewed our work-related dental insurance to determine whether or not we were losing money insuring our children given the high premiums for orthodontic coverage and the low payout for braces. In that case we were (almost) breaking even with our premiums equaling what we will get back. It made me wonder, though, whether we are getting any real benefit from our eye care insurance. Is it worth paying the health insurance premiums for eye tests and eyeglasses or are we losing money?

What Do We Pay for Eye Care Insurance?

We have our health coverage for eye care through my husband’s employment. It’s one of the “shopping cart” of benefits on which he can spend his benefit money.

For our family, the premium is $240.96 per year.

What Do We Get for Vision Care Coverage?

For this we receive:

$50 per 24 months per person for eye exams
$250 per 24 months per person for eye glasses

Are We Winning? Or Are We Paying More for Eye Care Than We Are Receiving?

Well, this is where the math comes in.

Reimbursement for Eye Exams

First, we don’t pay anything for eye exams for our children because we live in Ontario where the provincial health plan covers those costs.

My husband and I do have annual eye exams, though, and the cost is $60 each. So we use the full $50 each—but we are only entitled to that reimbursement once every 24 months each.

So it would be inaccurate to say we are getting back $100 of the $240.96 per year. In fact, we are using $100 of 2 x $240.96 which is $481.92. Or $50 of $240.96.

So if we apply the cost of our eye exams to our premiums, we still need to get back an additional $381.92 every 2 years to break even. (Or $190.96 each year.)

Reimbursement for Eye Glasses

This one is not obviously a win either. I have had the same eye glasses for over 15 years. Each year the Optometrist confirms that I still need that same prescription. I suppose one of these days that may change (or the glasses may break) but for now, I am not saving any money from being insured.

My husband’s prescription has also not changed for more than 5 years. He did get a new pair about 6 years ago but how often does your child destroy your glasses once they are past the toddler age? I would guess that he is not saving any money from being insured, either.

But what about the children? Ah, now we’re talking $$$!

For 8 years (each) neither needed eye glasses. If we’d been paying this benefit premium for all of those 8 years, we’d be financially in the hole over $1500. However, this cost only started when they downgraded my husband’s benefits a couple of years ago. So fortunately, that’s not the case.

Anyway, our children now need eye glasses. In fact, they’re at that terrible age where they need a new prescription every year. While they both have re-used frames a few times, they need new lenses annually.

This is where it improves. Generally, their eye glasses cost from $150 to $275 depending on the frames and the lenses. Being ~~easily manipulated~~ kind parents, we don’t shop based solely on price. We long ago realized that if our children like their glasses, they will wear them and take care of them. (Which is how they sometimes use the same frames for over 2 years when some of their friends have lost, smashed or mangled theirs within days of their purchase.)

Again, we can’t simply say, ok, that means we claim $300 to $550 per year and get back $190.96. The eye glass refund of $250 per person is only once every 24 months.

So if we paid $250 or more for a pair of eye glasses for one person, that would pay out our cost of $190.96 for that year. And we would be ahead by whatever we paid for any other person that year for eye glasses up to $250.

But the next year, we would still have to pay the premium but we wouldn’t be eligible for any eyeglass reimbursement.

So we break even, or come out ahead, if we are reimbursed for eye glasses for at least $381.92 every two years.

But we don’t always. Sometimes, the bill is only $300. That leaves us with an $81.92 loss over a 2-year period.

(Wait, you say, why didn’t you just use up the rest of the $250 entitlement the second year? See further on for the details.)

Summary Comparison of When We Lose Money on Our Vision Care Premiums

Premium paid first year: -$240.96
Reimbursement for adult eye checkups: $100
Reimbursement for eyeglasses at $150 each: $300
Premium paid for the second year: -$240.96
Reimbursements for the second year: no eligibility if we want to maximize our savings before age 19
Total: -$81.92

We lost by paying $81 more over two years than we get reimbursed.

Summary Comparison of When We Gain Money on Our Vision Care Premiums

Premium paid first year: -$240.96
Reimbursement for adult eye checkups: $100
Reimbursement for eyeglasses at $250 each: $500
Premium paid for the second year: -$240.96
Reimbursements for the second year: no legibility
Total: $118.08

We win by $118.

A Word of Caution about Health Insurance Claim Limits per 24 Month Period

How I Lost Money Claiming for Eye Glasses

Be careful about how your insurer decides what a 24-month period is, too.

When we first started using this insurance policy, I made a claim of $200 for one child’s glasses in the first year. The insurer reported there was $50 of coverage left. So the next year, I submitted the eye glass receipt for the new prescription expecting to get $50 reimbursed. It was.

The next year, I waited carefully to ensure it was 24 months since the first $150 claim. When it was, I bought my child a third pair of eye glasses and submitted the receipt, expecting to get back $250. It was refused. I was told there was no coverage until 24 months after the second reimbursement of $50!

This despite the policy booklet which says “Coverage is based on a 24-month period, starting from the date the first expense is incurred.”

I still don’t understand how I was refused. But I did learn not to make a small claim and start the 24-month wait clock again. The way I think of it, that $50 claim probably cost me one full pair of eyeglasses because my child’s coverage will end when my child is 19.

The Moral of the Story of Vision Care Insurance

I guess what I learned from exploring our vision care premiums and reimbursements is that we are actually very close to losing money on our eye health plan. I’d strongly suggest anyone who has optional eye care insurance check their own numbers and make sure they are actually saving money by being insured.

And as soon as our children are no longer eligible for eye glasses under my husband’s insurance, I suspect we will drop our coverage.

Why Is the Early Fall a Good Time to Review the Cost and Benefits of Health Insurance?

In our case, each year you have to select what coverage you want for the next year in the autumn. By evaluating whether our health insurance is too expensive to be worth it in September, we are better prepared to make a decision of what to buy in November.

It’s possible your employer uses a different deadline for selecting your health benefits. Check with your HR department if you’re not sure what coverage you may have and when you must make any decisions about it.

Related Reading

Are We Losing Money On Our Dental Plan Because of Orthodontic Coverage for Our Children?

Join In
Do you pay for insurance to cover eye checkups and eye glasses? Is it saving you money? Please share your experiences with a comment.

Like most parents who have had to pay for braces for their child’s teeth, I cringed when I heard the first quote for the work. In fact, I cringed when I heard each quote! Before we even got any estimates for braces, however, we started looking for ways to save money paying for our child’s orthodontics and we did find a few.

Check What Your Dental Plan/s Will Pay for Orthodontic Treatment

I griped at great length earlier about how my husband’s dental plan provides only very limited coverage for orthodontic work for dependant children. Still, at least we recouped most of the money we have paid and will be paying in premiums. So we saved money not because our costs were reimbursed but because we had to pay the premiums anyway and at least this way we got our own money back. A dubious win.

If your child is listed as a dependent under more than one dental plan, be sure to check the details of each plan. It may be possible to get some coverage from each plan.

Don’t buy into a dental plan just to get orthodontic coverage without checking out every detail! You don’t want to pay more in premiums than you will receive back in reimbursement.

Use a Health Spending Account, HSA to Pay for Braces If You Can

Some employers offer their staff a benefit called a Health Spending Account. The money in the account is used to pay for medical expenses.

Each of these plans has its own rules and restrictions so you’d have to ask for details from your company’s benefits’ department.

In our case, my husband can have an HSA provided he puts the money into it. The employer doesn’t contribute anything. It’s still valuable, though, because he puts in before-tax dollars. And in his tax bracket, that’s a substantial saving.

There’s a cap on how much he can put in his HSA and there’s some tricks where they can seize all of the money if it doesn’t get spent after 2 years.

Still, this enabled us to pay for much of the required work with pre-tax dollars, which meant a substantial saving. (I’m still waiting to see, though, if any of this turns out to be a taxable benefit. If it does, it will negate the value of the plan, though, so I’m hoping it isn’t.)

Claim the Costs of Orthodontic Work on Your Income Tax Return

First of all, orthodontic work cannot be claimed on your income tax return as a medical expense if it is done only for cosmetic reasons. The work must be medically necessary. Talk to your dentist and orthodontist about this if it’s not clear.

Whether you can save much money by reducing the income tax you have to pay will vary greatly depending on your annual income and on your combined medical expenses. You can see an example of how to claim the expenses on the CRA website.

If you have a high annual income, and no other medical expenses, you may not get to claim very much of the cost of braces on your tax return in April. For example, if your orthodontic expense for the year was $3500, and you had $1500 reimbursed by your dental plan and nothing reimbursed by a HSA, then you only have $2000 left that you can claim.

If your net income is over $71 734 then you have to subtract $2152 from your medical expenses (for the 2013 taxation year) leaving you with nothing to claim.
If your net income is lower, the amount you subtract is also lower than $2152 and you will get to claim some of the expense.

There are some tricks to claiming medical expenses. For example, they don’t have to be for the January to December period for which you are reporting your taxable income. Please read the details on the CRA website to see if you can increase your expenses by shifting the reporting period a few months one way or the other.

Pay in Advance

Many orthodontists offer a discount if you pay the entire treatment plan amount before beginning treatment. It saves them the hassle of wondering if your cheques will bounce and, of course, they get to use your money sooner.

Our orthodontist offered 5% off the bill if we paid in a lump sum. So we did.

If Possible Get Credit Card Rewards For Paying for Orthodontistry

If and when you do pay, try to maximize any benefits you can get for the actual payment.
Our orthodontist takes all of the major credit cards; it may be worth checking what payment terms your orthodontist offers before making the final decision about who to pick.

We don’t have a cash-back credit card but we do have a card that gives Petro-Points. So we now have enough Petro-Points to get another Best Buy eCertificate in time for the Boxing Day sale, should we want one. Or we could get another free year’s basic membership at CAA for one of ourselves or our relatives.

Save the Money Before You Need It to Avoid Paying Interest On a Loan

This one should be obvious but….

If you have to get a loan to pay for braces for your child, you are going to have to pay interest as well as the actual cost of the dental work. When I was paying for my child’s work, the clerk even asked me if I was going to be using my HELOC to pay because she knew others were.

Ouch: Giving up equity in your home just to have your child’s teeth straightened?! Not for me, thanks.

If I couldn’t afford to pay to have the work done, then unless my child was actually in dental distress because of the alignment of his or her teeth, I would not get the work done.

Admittedly, though, it’s easy to say that. It might have been much harder if I’d actually had to do that. Good thing we saved.