Explosive uplift in Australians tapping into their super for dental treatment

Media item: article

Date published: 3 March 2023

Subject: early release of superannuation for dental treatment

This page records the media item. The original article is the property of its publisher and is not reproduced here.

Why this is happening at all

The growth in early-release applications for dental treatment is a symptom of one structural fact: dental care sits largely outside Medicare. There is no general Medicare rebate for adult dental treatment. Public dental services exist but are means-tested and carry long waits for non-urgent care. Private health insurance dental extras are capped, typically well below the cost of major treatment.

The scale of that affordability problem is on the public record. A submission to the Senate inquiry into the value and affordability of private health insurance and out-of-pocket medical costs, published by the Parliament of Australia, cites an Australian Institute of Health and Welfare survey finding that nearly a third of people aged 5 or older — 32% — avoided or delayed visiting a dentist because of cost (AIHW, 2013). The submission's own recommendation, that government develop a recommended non-mandatory dental fee schedule, is that submitter's argument rather than a government finding — but the avoidance figure it quotes is the background against which people reach for their super.

So a person needing extensive work — full-mouth rehabilitation, multiple implants, advanced periodontal treatment — faces a bill in the tens of thousands with no third-party payer. Superannuation is often the only large sum of money they have.

That is the honest context. What follows is what the rules actually are, because this is an area where the marketing runs a long way ahead of the law.

How compassionate release actually works

Early release of super on compassionate grounds is administered by the Australian Taxation Office (it moved to the ATO from the Department of Human Services on 1 July 2018). It is not approved by a dental practice, and no practice can grant it, guarantee it, or speak for the outcome.

The ATO's medical treatment ground is not a general ‘I need dental work’ provision. As published by the ATO, the treatment must be to treat a life-threatening illness or injury, to alleviate acute or chronic pain, or to alleviate an acute or chronic mental illness — and it must not be readily available to you through the public health system.

The application requires supporting medical reports from registered practitioners, including a specialist, and the ATO publishes the current requirements about who may write them and what each must certify. Check the current requirements at ato.gov.au before assuming a dental report alone will satisfy them — the composition of the reports is the single most common reason applications fail.

Even where the ATO approves a release, your superannuation fund still has to agree to pay it. ATO approval is permission, not a payment order, and funds have their own rules and processing times.

The amount released must be reasonably necessary for the treatment and is assessed against quotes for the specific treatment claimed.

The costs that are usually not quoted

This is the part that is regularly omitted from advertising, and it is where the real money is.

Tax

Money released on compassionate grounds is not tax-free. It is paid as a superannuation lump sum, and if you are under 60, the taxable component is generally taxed at a concessional rate plus the Medicare levy — currently up to 22% including the levy. Your fund typically withholds it.

The practical effect: to receive $15,000 in your hand, you may need to release meaningfully more than $15,000. A quote that says ‘you can use your super for this’ and then quotes the treatment cost has not accounted for the tax.

Rates and thresholds change. Confirm current rates with the ATO or a licensed financial adviser, not with a dental practice.

Lost compound growth

Superannuation compounds. Withdrawing money at 40 removes not just that amount from retirement but everything it would have earned over the following twenty-five years. The long-run cost of a withdrawal is a multiple of the amount withdrawn — how large a multiple depends on returns and time, which is exactly the calculation a licensed adviser can do for your circumstances and this page cannot.

And the treatment it funds has a finite life: implant restorations, crowns and veneers all need replacing eventually.

Insurance inside super

Many super accounts carry life, TPD and income protection insurance. Reducing a balance can, in some funds, affect the cover or cause it to lapse if the balance falls too low to fund the premiums. This is checkable with your fund and worth checking before, not after.

Fees charged by ‘early release’ promoters

The ATO and ASIC have repeatedly warned about promoters who charge a fee — often a percentage of the released amount — to help people access their super. You do not need to pay anyone to apply. The application is free and you make it yourself through myGov.

Schemes that promise access to super outside the legal grounds are illegal early release. Participating in one can cost you the money, attract significant penalties, and in some cases the money is simply stolen.

What this means about how dental treatment should be presented

Section 133 of the National Law sets five limits on advertising a regulated health service. AHPRA's Guidelines for advertising a regulated health service list them: advertising must not be false, misleading or deceptive; must not offer a gift, discount or other inducement, unless the terms and conditions of the offer are also stated; must not use testimonials or purported testimonials; must not create an unreasonable expectation of beneficial treatment; and must not directly or indirectly encourage the indiscriminate or unnecessary use of regulated health services.

The guidelines explain why that last limb exists in terms that apply exactly here: encouraging indiscriminate or unnecessary use ‘can lead the public to buy or use a regulated health service they do not need and is not clinically indicated or provides no therapeutic benefit’, and ‘any health intervention involves inherent risks, so encouraging the use of regulated health services which is not based on clinical need or therapeutic benefit is not in the public interest’. AHPRA also names urgency language — ‘don't delay’, ‘act now before it's too late’, ‘don't miss out’, ‘time is running out’ — as potentially unlawful where it is tied to unsubstantiated claims that a person's health will suffer if they do not proceed.

Applied to superannuation, that means a practice should be:

Stating the treatment and its cost, not the funding mechanism, as the basis for the decision
Not presenting super access as easy, routine, approved or guaranteed
Not charging a fee to prepare an application beyond legitimate clinical report costs, and being transparent about any such cost
Not making the size of the treatment plan a function of the accessible balance — which is the specific abuse this whole area is vulnerable to. The same concern is already on the parliamentary record about a different funding source: the submission cited above argues that disclosure of a patient's private health fund status ‘can result in excessive and unnecessary dental treatment or “over-servicing”’. A superannuation balance is a larger version of the same disclosure.

The test of a treatment plan is clinical need, not what you can fund. If the plan changes when the funding changes, that is worth asking about.

Before going anywhere near this

Get the treatment plan and an itemised quote in writing, with ASDS item numbers. You cannot compare or fund what is not itemised, and the treatment discussion should cover the alternatives.
Get a second opinion, particularly for extensive or irreversible work. Take your records and radiographs with you — you are entitled to them.
Ask what the staged alternative is. Very often, urgent treatment can be separated from elective treatment and sequenced over years, which changes the funding question entirely.
Ask what happens if you do nothing, and what happens if you do only the urgent part.
Check the public system. Eligibility for public dental care in Victoria is broader than many people assume — concession card holders and their dependants, and children eligible under the Child Dental Benefits Schedule (a Medicare-funded scheme that is significantly under-claimed). Services Australia states the CDBS benefit as up to $1,158 for each eligible child over two consecutive calendar years for basic dental services, with the cap indexed on 1 January each year; the child must be eligible for Medicare and the family receiving a qualifying payment.
Check your health fund limits and any waiting periods, and whether annual limits reset in a way that lets treatment be staged across two benefit years.
Talk to a licensed financial adviser, or the free financial counselling available through the National Debt Helpline on 1800 007 007. Neither a dentist nor this page is licensed to advise you on superannuation.
Compare the alternatives honestly — a payment plan, a personal loan, staging the work. Each has a real cost. So does the super option; it is simply less visible.

Payment plan options are available. Where a plan is advertised as interest free, that describes the plan term only — a deposit may be required, an establishment fee and ongoing account fees may apply, and charges can apply if the balance is not cleared within the agreed period. The applicable terms depend on the provider and the amount financed, and are set out in writing before you commit — ask what the deposit and the establishment fee are, in dollars, and what the total will be by the end. Payment Plans.

The one-line version

Early release of super for dental treatment is legal, sometimes appropriate, and considerably more expensive than the amount withdrawn. It is decided by the ATO and your fund against a specific statutory test, not by a dental practice — and the decision belongs with you and a licensed adviser, informed by a treatment plan you have had a second opinion on.

Common questions

How do I know whether the quote I have been given is reasonable?

You cannot check it against a published benchmark, because Australia does not have one. That absence is the central complaint in the parliamentary submission cited above: ‘Without a dental fee schedule, access to private sector dentistry is unnecessarily inequitable. It is well known that private patients can go to multiple dentists and receive conflicting diagnoses and widely varying quotes for unpredictable dental fees. There are no consumer guidelines to ascertain the reasonableness of dental fees charged.’ That is the submitter's argument, not a government finding — but the underlying fact, that no recommended schedule exists, is not in dispute.

The nearest thing to a reference point is the profession's own survey of itself. The Australian Dental Association's Dental Fees Survey 2022 summarised fees charged by members in private practice as at 1 July 2022, from 3,819 valid responses out of 11,035 dentists invited. Across the 122 items surveyed, fees charged by general practitioners ‘appear to have increased by 3.7% during the two-year period since 1 July 2020’, with the smallest rises in preventive services and periodontics (1.6%) and the largest in orthodontics (6.9%). The finding most useful to a patient is the spread: ‘there was considerable variation in the fees charged within and between states.’ Among the minority of respondents who charge by time rather than by item, the mean hourly rate rose from $662 in 2020 to $921 in 2022, with rates ‘ranging between $450 and $1,500 per hour’.

So the practical answer is not ‘find the right price’ but get the plan itemised with ASDS item numbers, then get a second opinion on the plan itself. Variation between quotes is expected; variation in what is being proposed matters far more, and only itemisation makes it visible. Price Guide and Second Opinions.

The offer says ‘interest free’ and quotes a monthly amount. What has to be in writing?

The total. AHPRA's Guidelines for advertising a regulated health service give a list of things that may put an advertisement in breach of section 133, and one of them is advertising that ‘states an instalment amount without stating the total cost (which is a condition of the offer)’. On the same list: advertising that ‘contains price information that is unclear, inexact or vague’, and advertising that ‘excludes reference to any existing restrictions or limitation, such as age, expiry date, geographical or restrictions on who is eligible for the offer’.

The guidelines are equally direct about the word itself: ‘The public generally consider the word “free” to mean “absolutely” free. When the costs of a “free offer” are recouped through a price rise elsewhere or through other sources such as Medicare, the offer is not actually free.’ And where the terms will not fit alongside the offer, they must still be reachable — ‘Advertisers must ensure that terms and conditions are easily found and accessible. The public should not be required to exhaustively search for or contact the advertiser for terms and conditions.’

One limit is worth knowing, because it changes what you should insist on. The guidelines state that ‘A practitioner providing information about treatment or costs in a consultation, whether in person, by telephone or video or via other digital means, is not considered to be advertising a regulated health service.’ The advertising rules govern the advertisement; what you are told across the desk is not covered by them. That is the reason to have the figures written down rather than explained.

Why does the practice want my private health fund card before there is a treatment plan?

There is a legitimate version of this — checking a rebate so the gap can be quoted accurately — and it should happen after a plan exists, not before. The parliamentary submission cited above raises the other version squarely, from the patient's side: that health fund status ‘is unnecessarily collected on “new patient forms”’, that ‘my private health fund card has been requested by dental businesses up front and the card has been swiped via HICAPS at reception; seemingly to check my remaining annual benefits’, and that in that submitter's experience disclosure ‘has resulted in excessive and unnecessary dental treatment or “over-servicing”’.

That is one person's account in a submission, not a regulator's finding, and it should be read that way. What it supports is a reasonable sequence rather than an accusation: ask for the examination findings and the plan first, and supply fund details afterwards, when there is something to claim against. If the recommended treatment expands after the balance is known, that is the thing to ask about — and it is exactly what section 133's prohibition on encouraging ‘the indiscriminate or unnecessary use of regulated health services’ exists to address.

I live outside Melbourne and every quote I have seen is higher. Is that normal?

The published evidence points that way, though the reasons are structural rather than anything about an individual practice. The ADA's fee survey found ‘considerable variation in the fees charged within and between states’, with general practitioners in SA and WA charging the lowest fees on average and those in the ACT and NT the highest — and the ADA itself cautions that the ACT and NT results rest on small samples and ‘should be viewed with caution’.

The parliamentary submission makes the distributional argument: ‘Rural patients are particularly disadvantaged by the absence of a national dental fee schedule, as most private sector dentists cluster in wealthier populated suburbs’, and ‘private health insurer owned dental clinics (with no-gap fees) and preferred providers (less gap) cluster in major cities. The out-of-pocket expenses for rural patients are thus likely to be greater.’ Again, the submitter's argument, not a finding — but it explains why a preferred-provider or no-gap arrangement may simply not exist near you, and why checking with your fund which providers are in range is worth doing before you assume the travel is the cheaper option.

If I think a fee or an advertisement was wrong, who can I actually complain to?

Distinguish the two, because they go to different places and only one of them has a regulator.

Advertising and professional conduct go to AHPRA. The National Law's advertising requirements are enforceable, and the penalties were raised in 2022: AHPRA records that ‘the maximum financial penalty per offence increased from $5,000 to $60,000’ for an individual, and ‘from $10,000 to $120,000’ for a body corporate. Responsibility sits with whoever controls the content — the guidelines define an advertiser as ‘The person or entity who controls part or all of the advertising (i.e. who authorises the content)’, which includes advertising drafted by a marketing agency or a third party.

The amount of the fee itself is a different matter. The parliamentary submission cited above puts it bluntly: ‘there is no public body for patients to complain to about Australia's high dental fees.’ Fees in private dental practice are not set or capped by any regulator, so a fee you consider too high is a consumer and contractual question, not a registration one. That is why the leverage is all at the front end — an itemised written quote, a second opinion, and asking what the staged alternative costs — rather than afterwards. Understanding Your Treatment.

Practical details

Smile Solutions, Level 1, 220 Collins Street, Manchester Unity Building, Melbourne VIC 3000. Phone 13 13 96, or theteam@smilesolutions.com.au. Monday–Friday 8.00am–6.00pm, Saturday 8.30am–1.30pm, Sunday by appointment.

Every practitioner's registration can be verified free on the AHPRA public register at ahpra.gov.au.

This page records a published article and its date, with general information. It is not financial advice, taxation advice or a recommendation about your superannuation, and no one at Smile Solutions is licensed to provide it. Eligibility, tax rates and requirements are set by the ATO and change; confirm them at ato.gov.au and seek advice from a licensed financial adviser. The fee figures quoted above are the ADA's survey of its own members as at 1 July 2022 and are not current prices. Payment plan terms are set by the credit provider and change; confirm current terms directly before you commit. This page is not a diagnosis or a treatment plan. Third-party published content is not reproduced.

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