Does an FSA Cover Lasik Surgery Expenses?
Explore how Flexible Spending Accounts can be used to cover Lasik surgery costs, including eligibility, reimbursement, and tax considerations.
Flexible Spending Accounts (FSAs) allow individuals to allocate pre-tax dollars toward certain medical expenses, helping to reduce healthcare costs. Elective procedures like Lasik surgery have grown in popularity for their life-enhancing benefits, leading many to wonder if FSA funds can be used to cover the expense.
Understanding how FSAs apply to specific procedures like Lasik is key to effective financial planning. This article explores Lasik’s eligibility under FSA guidelines, steps for reimbursement, and related tax considerations.
FSA Eligibility for Lasik
Lasik surgery, which corrects vision issues, is eligible for FSA coverage as outlined in IRS Publication 502. The IRS designates Lasik as a qualified medical expense because it treats refractive errors in vision, distinguishing it from cosmetic procedures that are typically ineligible. This classification allows individuals to use pre-tax contributions for the procedure, offering savings by exempting these funds from federal income, Social Security, and Medicare taxes.
Reimbursement Steps
To receive FSA reimbursement for Lasik, confirm with your FSA administrator that the procedure is covered under your plan, as some plans may have specific requirements or require pre-approval. Collect detailed billing statements and receipts from your healthcare provider that outline the procedure and its cost. Submit these documents along with a completed reimbursement form provided by your FSA administrator. Many administrators offer online portals for faster submissions.
Documentation Requirements
Reimbursement requires precise documentation. Obtain a detailed invoice from your healthcare provider that itemizes services, dates, and costs to meet IRS requirements under Section 213(d) of the Internal Revenue Code. Retain any correspondence or documentation that demonstrates the medical necessity of the procedure, such as a letter from an ophthalmologist or optometrist. Pre-authorization or pre-approval documents from your FSA plan should also be kept in case of eligibility disputes.
Tax-Related Factors
Using an FSA for Lasik provides notable tax advantages. Contributions are made with pre-tax earnings, reducing taxable income. Withdrawals for eligible expenses like Lasik are not subject to federal income, Social Security, or Medicare taxes. However, medical expenses reimbursed through an FSA cannot be included in itemized deductions for medical costs exceeding 7.5% of adjusted gross income (AGI). Planning FSA contributions alongside anticipated medical expenses can maximize tax benefits.
Annual Contribution Caps and Deadlines
Understanding FSA contribution limits and deadlines is essential when planning for Lasik. The IRS sets annual caps, adjusted periodically for inflation. As of 2023, the maximum contribution is $3,050 per employee. If both spouses have FSAs through their employers, each can contribute up to the maximum, effectively doubling available funds for medical expenses.
FSAs operate on a “use-it-or-lose-it” basis, meaning unused funds are forfeited at the end of the plan year unless your employer offers a grace period or carryover option. Some plans provide a grace period of up to 2.5 months into the next year, while others allow carrying over up to $610 (as of 2023) into the following year. Check your employer’s specific provisions to avoid losing unspent funds. Scheduling Lasik within the plan year or grace period ensures you fully utilize your FSA contributions.