Flexible spending accounts (FSA) are one of the most overlooked options for making LASIK and other refractive surgery procedures more affordable and within reach of every budget. Sometimes called a flex plan, cafeteria plan or medical spending account, an FSA offers important benefits and yet is often misunderstood and certainly underutilized.
If you’ve never considered setting up an FSA, here is an overview of the program and how you can use it to your advantage to help pay for medical-related expenses, while also going home with more spendable income in your pocket through valuable tax savings.
An FSA can help you move one step closer toward your goal of life-changing, permanent vision correction.
What is a Flex Plan or Medical Spending Account?
Flexible spending accounts are set up as part of a company’s employee benefit package. While the majority of employers offer this benefit, not all do, so be sure to check with your human resources department to see if your company participates.
Congress established healthcare flexible spending accounts in 1978 to help individuals and families set aside pre-tax funds to pay for out-of-pocket medical and dental expenses not covered by medical insurance plans.
Your employer does not contribute to the FSA – you do through a voluntary pre-tax contribution taken out of your check each pay period. The goal of the program is to help lower healthcare costs and reduce out-of-pocket expenses that may be a burden for the average working American.
What Are The Benefits of an FSA?
You can think of the FSA as a medical savings account to which you contribute regularly. But there is a very important difference. The money you put into your FSA account is not taxed and is therefore not reported to the IRS. All of the contributions are done through pre-tax payroll deduction.
Each pay period, deductions for your FSA are taken prior to calculating federal, state, social security (FICA) and payroll taxes. The tax advantages of this process can be significant.
Consider these benefits:
1) With payroll deduction, you can easily and seamlessly accumulate money in the account to pay for medical expenses.
2) The FSA reduces your taxable income. This means that in effect, you take home more money weekly, and at the same time, the annual amount you pay in taxes annually will be lower.
How Does An FSA Work?
During your employer’s open enrollment benefit period, usually each fall, you can elect to set up an FSA to pay for any “covered” medical expenses you expect to incur during the year.
Currently, you can contribute any amount you like up to an annual limit of $2,500. The funds are taken out of your paycheck in small equal increments throughout the year during each pay period. A new FSA must be set up each year.
As you incur medical services during the year that are not covered by your health insurance plan, you submit receipts and/or billing statements to the plan administrator. You will then receive a check (taken from funds in your FSA) to reimburse you for expenses. The receipts must include the healthcare provider’s name, amount charged, type of service and date of service.
What Medical Expenses are Covered in an FSA?
You can use your FSA to cover the costs of most healthcare services, including LASIK Surgery and other vision correction procedures like PRK and Visian ICL. Any medical, surgical or dental procedure that is considered a deductible medical expense by the IRS but is not reimbursed through your company health insurance plan can be reimbursed through the FSA.
In addition, your FSA funds can be used for prescription medications, eyeglasses and contact lenses, supplies like insulin, as well as medical-related co-pays and deductibles. As of January 2011, over-the-counter medications and over-the-counter medical-related supplies are not covered unless they are specially prescribed by a physician.
What’s The Next Step?
The first step is to make sure that your employer offers a flexible spending account plan as part of the employee benefits package. Then prior to setting up an FSA, do your homework. Identify the vision care center of your choice and schedule a consultation to make sure you are a good LASIK Surgery candidate. Discuss with the doctor the anticipated costs so you can do a better job of planning.
Most likely, the cost of undergoing LASIK in both eyes will exceed the annual $2,500 cap on your flexible spending account, but it will go a long way toward helping defray expenses. To help with any remaining balance, Hoopes Vision offers a variety of financing options, including low-interest and zero-interest plans.
For more information, or to schedule a consultation for LASIK, please call our office at 877-305-2745, or visit HoopesVision.com