When is D9985 used?
The D9985 dental code is used to apply sales tax to dental treatments, products, or services when mandated by state or local regulations. Since not every state requires sales tax on dental care, practices must accurately report and charge this additional fee only where legally required. Apply D9985 exclusively when you have a legal obligation to collect sales tax on a transaction—avoid using it as a general-purpose or convenience code. Always confirm your state's current tax requirements to maintain compliance and avoid billing mistakes.
D9985 Charting and Clinical Use
Accurate documentation is essential when using D9985. The patient's account and billing statement should clearly show the sales tax as a distinct line item, noting D9985. This clarity helps patients understand the charge and protects your practice during potential audits. Typical situations where D9985 might be needed include selling dental items (like toothbrushes, whitening products, or protective guards) or elective treatments that aren't sales tax exempt. Always record the specific item or service, the tax percentage used, and keep supporting documentation for at least the minimum timeframe mandated by state regulations.
Billing and Insurance Considerations
The majority of dental insurance policies do not cover sales tax, as this is typically the patient's financial obligation. When filing claims, include D9985 as a distinct line entry, but don't anticipate reimbursement from the insurance company. Make sure your practice management system is set up to assign D9985 to the patient's financial responsibility. When you receive an Explanation of Benefits (EOB) that rejects D9985, clearly explain to the patient why this charge exists and that their insurance doesn't cover it. For offices in states with frequently changing sales tax regulations, establish routine reviews of your billing procedures to maintain compliance and prevent revenue cycle issues.
How dental practices use D9985
Scenario: A patient buys a custom nightguard from your office in a state where dental devices are taxable. The nightguard costs $400, and the current sales tax rate is 7%.
Step-by-step process:
Confirm the state's sales tax rules for dental devices.
Determine the sales tax amount: $400 x 0.07 = $28.
On the patient's bill, show the nightguard as one entry and D9985 (sales tax) as a separate $28 charge.
File the insurance claim for the nightguard only; don't anticipate coverage for D9985.
Collect the $28 sales tax directly from the patient during their visit.
Keep records of the transaction and tax payment for your files.
This method ensures proper compliance, clear communication, and precise revenue management for your dental office.
Common Questions
Is D9985 applicable for telehealth and virtual dental consultations?
D9985 is designed exclusively for collecting sales tax on physical dental products and taxable goods, not for professional healthcare services like telehealth or virtual consultations. While most states exempt healthcare services from sales tax requirements, it's essential to verify your local tax regulations to determine if any components of your virtual service offerings may be subject to taxation.
What's the proper procedure for handling refunds when patients return taxable dental products that included D9985?
When processing refunds for returned taxable dental products, the practice must refund both the product cost and the collected sales tax, then make corresponding adjustments to the D9985 entry in the patient's account ledger. The practice is also required to update its sales tax documentation to reflect the returned merchandise and ensure precise reporting to the appropriate state or local tax agencies.
What are the potential consequences of misusing D9985 or failing to apply it when legally required?
Improper application or omission of D9985 when mandated by law can lead to serious compliance violations, resulting in monetary fines and penalties imposed by state or local tax agencies. To prevent these legal and financial repercussions, dental practices should conduct regular reviews of their billing protocols, maintain current knowledge of applicable tax regulations, and implement comprehensive staff training on the correct usage of D9985.