LASIK and Flexible Spending Accounts: Saving Money on LASIK

LASIK offers people the opportunity to correct their vision and, ideally, end their dependence on corrective lenses. Unfortunately, vision correction surgery is considered an elective procedure and is usually not covered by health insurance.

However, for the cost-savvy patient, there is a method to reduce the cost of LASIK. Many companies offer employees a Flexible Spending Account (FSA), which allows them to use pre-tax dollars to pay for LASIK. Depending on your tax bracket, you could save as much as 30 percent by using money from an FSA account.

If your company offers FSA accounts, we recommend that you contact your Human Resources department to investigate this option. The staff at Deen-Gross Eye Centers in Hobart and Merrillville is familiar with LASIK FSAs and can explain how your FSA dollars can be used at our vision center to make treatment more affordable.

What Is an FSA?

An FSA is an employer-sponsored benefit that allows you to deduct a percentage of your paycheck, before taxes, and put the money into an account earmarked for eligible medical expenses not covered by regular health insurance plans. This includes LASIK.

The money is exempt from federal and social security taxes, and usually from state income taxes, which can save you between 10 and 35 percent in taxes, depending on your income.

Before you create an FSA, be sure to ask your human resources department for all the rules and caps on FSA accounts. Planning and timing is essential to take full advantage of FSA dollars.

An Important First Step

If you plan on setting aside money in an FSA account for LASIK surgery, you should first find out if you are a good candidate for vision correction surgery. Not everyone can undergo LASIK. If you set up an FSA and then find out you cannot have the surgery, you may have excess funds tied up in an FSA.

Timing may also be important. Because the IRS caps contributions on FSAs at $2,500 annually, there may not be enough FSA funds to pay for LASIK on both eyes in one year.  You may want to consider staggering surgery by having LASIK performed on one eye during one tax year and doing the other eye the next tax year.

Other FSA rules you should note:

• FSA dollars must be spent on eligible expenses. LASIK and other vision surgeries are among the medical expenses approved for FSA spending.
• There is a cap on FSA accounts. In 2014, the maximum that can be set aside is $2,500.
• Only $500 can be carried over. This is a recent improvement. In the past, there was a use-it-or-lose it rule and all funds left over at the end of the year were forfeited. That rule has been relaxed and now $500 in unspent funds can be carried over to the next year if your company does not already offer a grace period. It’s important to talk to your human resources department to understand the rules on carryover at your company.
• Deductions. Once you sign up for an FSA, the IRS will not allow you to reduce the amount of money you contribute to your FSA for that tax year. That’s why it’s important that you plan for upcoming expenses wisely.

If you need information, please contact us for your free consultation.