Waving goodbye to glasses and contacts can be life-changing. But the cost of LASIK surgery can raise concerns. Fortunately, there’s a solution that can significantly reduce your financial burden: Flexible Spending Accounts.
A Flexible Spending Account (FSA) (also called a flex plan, reimbursement account, Flex 125, Tax Saving Plan, Medical Spending Account, a Section 125, or a Cafeteria Plan) is an employer-sponsored benefit account that allows you to contribute pre-tax dollars towards qualified medical, dental, and vision care expenses. This translates to real savings – the money you contribute is deducted from your paycheck before taxes are applied, lowering your taxable income.
The beauty of FSAs for LASIK surgery lies in the fact that the IRS considers laser vision correction an eligible medical expense. This means you can use your pre-tax FSA funds to cover a portion, or even the entirety, of the LASIK procedure, depending on your specific circumstances.
TLC’s simple FSA Savings Calculator can show you what savings you can receive on LASIK by using a Flexible Spending Account.
Benefits of Using an FSA for LASIK
- Immediate Access to Funds: One of the most significant advantages of an FSA is the ability to access the full amount you have elected to contribute for the year, right from the start. This means that even if you have only contributed a fraction of the total amount, you can still use the full sum to pay for your LASIK procedure without delay.
- Tax Savings: By paying for your LASIK surgery with pre-tax dollars, you can potentially save up to 30% on the overall cost, depending on your tax bracket. This significant savings can make the dream of perfect vision more attainable than ever before.
- Flexibility: FSAs offer flexibility in terms of eligible expenses. In addition to LASIK, you can use your FSA funds to cover a wide range of qualified medical expenses, including prescription drugs, copays, deductibles, and more.
Estimated Income Tax Savings
| Your Annual Contribution | 15% Tax Bracket | 28% Tax Bracket | 31% Tax Bracket |
|---|---|---|---|
| $100 | $30 | $43 | $46 |
| $250 | $74 | $107 | $114 |
| $500 | $148 | $213 | $228 |
| $1,000 | $296 | $426 | $457 |
| $3,000 | $890 | $1,280 | $1,370 |
| $5,000 | $1,483 | $2,133 | $2,283 |
Note: This example takes into account federal income taxes, FICA (Social Security taxes) at 7.65%, and state taxes at 7% (state taxes will vary).
How Does a Flexible Spending Account Work?
To begin saving, your employer will ask you how much money you’d like to contribute for the year (limits apply). There is only one opportunity a year to enroll, except in the case of qualified “family status changes” such as marriage, divorce, birth, or loss of a spouse’s insurance coverage.
The amount you designate for the year is taken out of your paycheck in equal installments each pay period and placed in a special account by your employer. When you incur medical expenses not fully covered by your insurance, you submit a copy of the Explanation of Benefits or the provider’s invoice and proof of payment to the plan administrator, who will then issue you a reimbursement check.
Make the Most of Your FSA for LASIK Surgery
Here are some key points to consider:
- Contribution Limits: FSAs have annual contribution limits set by the IRS. These limits determine the maximum amount of pre-tax dollars you can contribute to your account each year. While these limits can vary, they provide a solid foundation for budgeting for LASIK.
- Plan Details: FSA plans offered by employers can have different rules and regulations. Understanding your specific plan details is crucial. Crucially, some FSAs operate under a “use-it-or-lose-it” policy, meaning any unspent funds at the end of the plan year are forfeited. LASIK surgery can be a perfect way to strategically utilize your remaining FSA balance before it disappears.
- Upfront Access: Some FSA plans offer a fantastic perk – cash advances. This allows you to access the entire year’s contribution for your surgery upfront, even if you haven’t contributed the full amount yet. This empowers you to schedule your LASIK procedure sooner rather than later.
Maximizing Your FSA for LASIK: Strategies and Considerations
Plan Ahead:
Determine the approximate cost of your LASIK procedure and contribute the maximum allowable amount to your FSA. This strategic planning can ensure that you have sufficient funds available to cover the entire expense.
Utilize the Grace Period:
Many FSA plans offer a grace period, typically 2.5 months after the end of the plan year, during which you can still incur eligible expenses using the previous year’s funds. This grace period can be particularly useful if you need to combine funds from multiple plan years to cover the full cost of your LASIK surgery.
Coordinate with Your Employer:
Consult with your employer’s human resources department to understand the specific rules and regulations governing your FSA plan. This will help you navigate the process seamlessly and ensure that you maximize the benefits available to you.
What Expenses Are Eligible?
- Most elective surgeries
- Laser vision correction
- Deductibles
- Prescription drug co-payments
- Any expense that is considered a deductible medical expense by the IRS and not reimbursed through the FSA
This offer is only available to US residents. Not all employers participate in FSA programs, so it is recommended that you check with your benefits manager to see if your employer participates. It is important to calculate how much money to contribute for the year. If you put in more money than you need, by law, you will not be able to receive it back. For LASIK surgery, we recommend that you have a consultation first to determine candidacy prior to making any allocations to your Flexible Spending Account.
Combining FSAs with Other Savings Options
FSAs are a powerful tool, but they might not always cover the entire cost of LASIK procedures. Here’s where exploring additional options comes in:
- Employer Discounts: Many employers have negotiated discounted rates with insurance companies. Leveraging these discounts in conjunction with your FSA can significantly reduce your out-of-pocket costs.
- Financing Options: Reputable LASIK providers often offer financing plans to make the procedure more manageable.
By combining your FSA with other savings strategies, you can unlock even greater cost-efficiency for your LASIK journey.
FSAs offer a fantastic opportunity to make this vision a reality with significant tax-advantage savings. Consult your employer for specific details about your FSA plan and discuss your candidacy for LASIK with a qualified ophthalmologist. With careful planning and the power of FSAs, you can step into a world of clear vision without breaking the bank.
Source:
Health Care Options, Using a Flexible Spending Account FSA. (n.d.). HealthCare.gov. https://www.healthcare.gov/have-job-based-coverage/flexible-spending-accounts/