Making LASIK Affordable: Flexible Spending Account (FSA)
What is a Flexible Spending Account (FSA)?
A Flexible Spending Account (FSA) or a Cafeteria Plan is an employer sponsored benefit that allows you to use pretax income on medical expenses. These expenses can include deductibles, co-payments and other charges not normally covered by medical insurance, such as refractive surgery. If you expect to incur medical expenses that will not be reimbursed by your health insurance plan, you should consider taking advantage of your employer’s FSA, if one is offered.
A Flexible Spending Account allows you to save money by reducing the amount of income tax you owe. The contributions made to the FSA are deducted from your paycheck before Federal,State and Social Security taxes are calculated.The end result is that these contributions are never reported to the IRS as income, allowing you to save money. For example, if you put in $4,000 to cover the cost of LASIK, you could avoid paying up to $1,600 in taxes depending on your tax bracket. In other words, your LASIK treatment only costs $2,400, a huge savings.
How does a Flexible Spending Account(FSA) work?
At the beginning of the plan year (usually January 1st or July 1st), your employer will ask you how much you want to contribute for the year. Most employers set a maximum contribution level of around $5,000. You only have one opportunity to enroll, unless you have a change in your family status (marriage, divorce, birth of a child, or loss of a spouse’s insurance coverage). The yearly amount you designate is then deducted in equal installments from your paycheck each pay period and deposited into a special account. In order to receive reimbursement for eligible expenses, you are required to submit the provider’s receipt or a copy of the explanation of benefits from your insurance. The request for reimbursement must occur before the year end deadline, otherwise you may actually lose the money.
What types of expenses are eligible?
Any expense that is considered a medically related deductible expense by the IRS and is not reimbursable by your insurance plan can be reimbursed through a Flexible Spending Account. Costs that are typically included are laser vision correction, prescription drug co-payments and deductibles.Not all employers participate in FSA programs. It is recommended that you check with your Human Resources Department to see if this type of plan is offered. You’ll need to do a little planning to decide how much you want to set aside from your paycheck to contribute for the year. If you put in more money than you need, it cannot be rolled over into the next year and you will lose it. For LASIK surgery, we recommend you that you have a consultation/screening to determine your candidacy prior to setting aside any allocations to your FSA.