To many people a Flexible Spending Account is a mysterious concept that sounds just a bit too good to be true. But do a bit of research and you will find out that it is a great benefit that can help you pay for healthcare expenses, child care and even LASIK eye surgery.
A Flexible Spending Account (FSA) is an employer-sponsored benefit that allows you to deduct a percentage of your paycheck and use that money to pay for medical expenses or other eligible expenses on a pre-tax basis. An FSA saves you money by reducing your income taxes. The contributions you make to a Flexible Spending Account are deducted from your pay before your Federal, State, or Social Security Taxes are calculated and are never reported to the IRS. The end result is that you decrease your taxable income and increase your spendable income. You can save hundreds or even thousands of dollars a year.
So how do you get started?
- Talk to your HR department: Speak with your company’s human resources or benefits manager to find out if your company offers a FSA to employees.
- Determine how much you want to contribute. To determine how much to contribute, make a list of the expected out-of-pocket expenses for you and your dependents for the next year. Be conservative so you don’t risk forfeiting any money.
A FSA can help you pay for LASIK
You can use the FSA to pay for things such as doctor visits not covered by insurance, acupuncture treatments, smoking-cessation treatments, hearing aids, non-elective cosmetic surgery, braces and more. You can set up an account to help you pay for childcare or if nursing home or in-home care for a relative.
Laser vision correction is an eligible FSA expense under IRS guidelines. Depending on your tax bracket, using your flex spending account to pay for your laser eye surgery can lead to significant savings.
There have been a few recent changes affecting flex spending accounts. FSAs now limit employees’ annual contributions to no more than $2,500 per year, a change that took effect in late 2013. But that still translates to big savings for your LASIK eye surgery if you choose to use it for that.
The Treasury Department and IRS made another big change. They did away with the use-it-or-lose-it provision, so employers can allow people to carry over up to $500 in their accounts from one year to the next. Employers could choose to make this change before the end of 2013, but they aren’t required to offer the carryover. They can continue to offer the March 15 grace period instead or offer neither option — but they can’t offer both.
If you are interested in more information, talk to your company’s HR representative. The staff at Liberty Laser Eye Center is also always happy to provide information about our payment system.
Another option is a health savings accounts allow a much higher deposit (as much as $6550 for a family below age 55), and can fully cover the cost of LASIK, for those who qualify for creating a HSA. Your HSA is a savings account that earns interest. There are many providers and it has a number of great benefits.
You own it. You are in charge of deciding to spend or save the funds in your HSA. If you decide to change employers or health plans, the account is yours to keep.
You don’t lose it. You can roll over any funds into next year’s plan.
You can grow it. You can save the money in your account and let it grow, to pay health care costs later, even during retirement.