It’s flex spending time! If you’re thinking about LASIK and are lucky enough to have an FSA (Flexible Spending Account), you’ll need to contribute to the account soon in order to use those dollars in 2021.
Similarly, if you contributed to the account in 2019, you’ll need to use those funds before the end of this year. If you don’t, you risk losing most of the money you contributed. Read on for more details.
An FSA is an account set up by employers which allows employees to set aside tax-free dollars. By putting this money aside, the employee pays no Federal, FICA or State taxes on the amount in their FSA account. This money can then be used to pay for many healthcare costs. Elective or cosmetic procedures, such as LASIK, are some of the items that can be paid for with this tax-free money.
How does an FSA work?
Employees are either given an FSA debit card which they can use to pay directly for services using their FSA funds, or they pay out of pocket and then submit a receipt to their employer for reimbursement from their FSA account.
Key Points to Consider
An important note to consider is that there’s a deadline for making contributions to an FSA plan. For most plans, that deadline is between October and December for the following calendar year. This means you would have to contribute by the deadline in 2020 in order to have access to the funds beginning in January 2021. So if you’re planning to have LASIK in 2021, you’ll need to contribute now. Be sure to ask your plan’s administrator, which would typically be your human resources director, what the deadline is for your particular plan, so you don’t miss out on these savings!
Changes in 2020
There is a change in the rules for FSA’s in 2020: The limit that you can contribute has been increased to $2,750.00 per year. As a reminder, the “use it or lose it” component of flexible spending softened a bit, starting in 2014. Employers now have 2 options for money left over in an FSA account at the end of the calendar year. They can either give the employee a 2 1/2 month grace period to use the money left over OR allow $550.00 to be rolled over into the FSA account for the following year. They can’t, however, do both. With the grace period option, the employee has 2 1/2 months after the end of the plan year in which to use his or her unused contributions, or risk forfeiting them.
Although this is good news, if you put aside the entire $2,750.00 for LASIK and are not a candidate for the procedure, you could still lose all but $550.00 in your flexible spending account. So, it pays to plan ahead! If you’re considering LASIK, you should first find out if you’re a candidate for the procedure before contributing any money to your FSA. Since the deadline for most plans is within the next few months, you should start the process now! At Mandel Vision, we offer free LASIK consultations with corneal specialist and micro-surgeon Dr. Eric Mandel in our state-of-the-art laser vision correction center in Manhattan. You can call us at 888-866-3681 to make an appointment, or you can click here to book your appointment online.
This blog has been updated from its original version published in November 2016.