Flexible Spending Accounts (FSA), or Cafeteria Plans, Allow Patients to Use Pre-Tax Dollars to Pay for LASIK — But Funds Need to Be Used by the end of the Plan Year.

A flexible spending account can be set up with your employer to allow you to use pre-tax dollars to pay for LASIK or PRK laser vision correction eye surgery at the Shapiro Laser Eye Center. A Flexible Spending Account (FSA) also is referred to as a Flex Plan, a Reimbursement Account, Flex 125 Plan, Tax Saving Plan, Medical Spending Account, a Section 125, or simply a Cafeteria Plan.

A flexible spending account can be set up with your employer. It is a type of Cafeteria Plan (a Cafeteria Plan is a separate written plan maintained by an employer for employees that meets the specific requirements of and regulations of section 125 of the Internal Revenue Code). As such, a flexible spending account is available only with job-based plans. It allows you, as an employee, to set aside a portion of your monthly earnings to pay for “qualified” expenses. Beginning in 2013, there is a $2,500 cap per plan-year (previously many employers had a $5,000 cap). Qualified expenses can be medical expenses (“medical FSA”) or even other types of expenses such as dependent care (“dependent care FSA”). Qualified medical FSA expenses include health insurance co-pays, some over the counter drug expenses, medical equipment such as crutches, diagnostic devices, and procedures such as LASIK or PRK laser eye surgery.

Earnings that are put by your employer into an FSA are not subject to payroll taxes. This has two positive tax-related implications: your overall taxable income is made lower and pre-tax dollars can be used to pay for LASIK. Funds in FSA accounts, however, need to be used before the end of the plan year in which they were set aside (the “use it or lose it” rule). Some employers, however, add language to their FSA plan to allow a 2 1/2 month “grace period” after the plan-year has ended in which to still use your FSA funds. Each year, over 30 million people actually forget to use up their money in their FSA by year’s end, meaning this money is lost to them, so it is important to keep track of deadlines.

It is important to note, by the way, that a flexible spending account (FSA) is different from a health savings account (HSA).

The Shapiro Laser Eye Center, through our offices in Ventura, Santa Barbara, and San Luis Obispo, has extensive experience working with patients using flexible spending account (FSA) money to pay for their LASIK or PRK laser vision correction eye surgeries. Please feel free to contact us with any questions either by using the contact form on this website or calling our office at 805-339-0566.

Flexible Spending Accounts (FSA), or Cafeteria Plans, Allow Patients to Use Pre-Tax Dollars to Pay for LASIK — But Funds Need to Be Used by the end of the Plan Year.

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