Keep More Money in Your Pocket

A Flexible Spending Account is an employer sponsored US government plan that allows you to set aside pre-tax dollars for eligible health care costs. This includes LASIK surgery.

That money is deducted from your gross salary BEFORE taxes are withheld. You therefore can reduce your tax burden and at the same time set aside that money for eligible medical expenses. Consequently you keep more of your hard earned money in your pocket because you pay less taxes.

Some Basic Rules about a Flexible Spending Account or FSA

The most important rule set up by the IRS is one everyone should understand. If you put in more money than you need or therefore use, you cannot get it back. It is the "USE IT OR LOSE IT" rule.

This means that you must spend all the money you have put into your FSA by the end of your employer's plan year or it is lost.

• There is only one opportunity to enroll and set up a FSA each year.
• A FSA pays for eligible out of pocket health care costs tax free. You save the amount equal to the taxes you would have paid.
• Your employer decides on the maximum you can set aside into your account. The IRS limits it to $2500 per plan year.
• Your employer deducts the tax free installments from your salary each pay period.
• You may use those funds and be reimbursed even if your FSA balance is not sufficient to cover the full amount. This means you can have LASIK in January even though you have not contributed the full amount yet.
• Some employers contribute to their employees' FSA.
• Some employers offer "grace periods" of up to two and a half months to use your account after the close of the plan year. Another option is the ability to carry over up to $500 into the following plan year, but employers may only offer one of these two options.
• You can save as much as 30% on your taxes by setting up an FSA and using it for LASIK and other medical expenses.