FSA for LASIK

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Can I Use My FSA for LASIK?

Yes, if you are considering LASIK, an FSA can save you money on procedure costs. The IRS allows you to apply your FSA funds towards laser vision correction, including LASIK, SMILE, and PRK

A Flexible Spending Account (FSA) is basically an untaxed savings account that you can use to pay for certain medical and dental expenses for you and your family. You can contribute a fixed amount of money ($2,750 for 2021) throughout the year to pay for health expenses.

LASIK (laser-assisted in situ keratomileusis) is a type of laser eye surgery. This procedure can correct nearsightedness (myopia), farsightedness (hyperopia), and astigmatism. LASIK is a great treatment option for those who do not want to wear contact lenses or eyeglasses anymore.

Depending on the technology used, the cost of LASIK eye surgery is typically anywhere between $4,000 to $5,000 for both eyes. If you plan to use your FSA to cover laser eye surgery, there are a few things to consider. 

An FSA requires you to spend the account funds within the plan year. Otherwise, you will lose those dollars. Additionally, the yearly contribution limit most likely will not cover your entire procedure (if the LASIK surgery costs more than $2,750).

However, you can check with your employer to see if these options are available:

A Grace Period of Up to 2 ½ Months

Instead of expiring after a year, your employer can offer an extra 2 ½ months to use your FSA funds. Depending on how the plan is set up, your employer may offer a grace period of less than 2 ½ months.

You can save your funds from the previous year and combine them with funds from the current year, as long as you are within the grace period. The combination of funds can offset the majority of your LASIK procedure costs. 

Rollover $500 of Unused Funds

If you do not spend all of your FSA money by the end of the year, most of the funds will expire.

However, your employer can also allow you to rollover $500 of leftover FSA balance into the next plan year. You can still contribute your full yearly limit on top of the $500 amount.

Keep in mind that your employer can only offer one of these options, but not both. Or, your employer may not provide either choice.

What Is an FSA?

FSA stands for Flexible Spending Account. An FSA is a spending account that allows you to set aside pre-tax dollars towards healthcare expenses. You can open an FSA through your employer if they offer the option.

For this article, FSA refers only to a healthcare FSA. The other type of FSA is called dependent care FSA, which is for child care expenses or care for other dependents.

Once you open a flexible spending account, the IRS allows you to contribute a certain amount of money to your account each year. This amount changes from year to year, so be sure to check with the IRS to see what the yearly limits are ($2,750 for 2021). Your employer may also contribute a limited amount to your FSA account, in addition to your contributions.

You will receive a debit card linked to your FSA and can use this card to pay for medical procedures. Or, you may need to submit your receipts for reimbursement, so be sure to keep all documentation related to your healthcare spending.

Pros & Cons of FSA for LASIK

A Health Savings Account (HSA) is another type of tax-free account people use to pay for medical expenses. If you are wondering whether to open an HSA account or FSA, here are some advantages and disadvantages to consider.

Advantages of an FSA:

  • No health insurance is necessary. With an HSA, you must also sign up for a high-deductible health insurance plan. You can open an FSA whether or not you have a health insurance plan.
  • Access your funds immediately at the beginning of the year. Once your FSA plan year starts, you can use the full amount right away. You pay back the funds throughout the year via automatic paycheck deductions. With an HSA, you can only use the amount you have already contributed to the account.

Advantages of an HSA:

  • You can open an HSA on your own. If your employer does not offer an HSA option, or you are self-employed, you can open an HSA on your own. You can only sign up for an FSA through an employer.
  • An HSA has higher contribution limits. For 2021, HSA limits are $3,600 for individual coverage or $7,200 for family coverage. An FSA limits you to $2,750 for 2021. You can apply your FSA funds towards your spouse’s or dependent’s medical expenses as well.
  • HSA funds do not expire. Unlike an FSA where you must “use it or lose it” within the year, your HSA dollars remain in your account until you use them.
  • You can invest your HSA funds. Many people invest their HSA balance to grow their retirement savings. Any interest you earn on the balance is also tax-free.

Both FSAs and HSAs are solid ways to lower your tax burden and save on healthcare costs (including LASIK).

How to Use Your FSA to Pay for LASIK Surgery

You can use your FSA funds to pay for laser vision correction. However, the maximum yearly contribution is unlikely to cover the full amount of a LASIK surgery procedure.

However, if your company offers a grace period, you can save your FSA funds and combine them with the following year's contribution. This will allow you to use the maximum amount of untaxed FSA dollars to pay for your LASIK procedure.

You can also use your HSA to pay for LASIK. Or you can combine funds from both your FSA and HSA to pay for the procedure.

The best advice is to plan ahead and speak with your eye surgeon's office to coordinate the timing with your procedure.

Takeaways

  • A Flexible Spending Account (FSA) is an untaxed account that allows you to pay for certain health expenses
  • LASIK and other laser vision correction procedures are eligible expenses that can be paid for out of your FSA
  • The maximum contribution limit for 2021 FSAs is $2,750
  • The average cost of LASIK surgery is between $4,000 and $5,000
  • Your yearly contribution to your FSA will probably not cover the full cost of LASIK
  • However, if your company offers a grace period, you can combine funds from the previous year to the current year and cover more of your LASIK procedure cost
  • You can also combine your FSA and HSA funds to pay for your procedure
Resources
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Adams, Katie. “Benefits Of A Dependent Care Flexible Spending Account.” Investopedia, 5 May 2019, www.investopedia.com/articles/pf/09/dependent-care-fsa.asp.

Backman, Maurie. “Flexible Spending Account Limits Are Going Up in 2020. Here's What You Need to Know.” The Motley Fool, 14 Nov. 2019, www.fool.com/retirement/2019/11/14/flexible-spending-account-limits-are-going-up-in-2.aspx.

=“Health Care Options, Using a Flexible Spending Account FSA.” HealthCare.gov, www.healthcare.gov/have-job-based-coverage/flexible-spending-accounts/.

“How to Use Your FSA and HSA for LASIK Surgery: 2019 Update.” American Refractive Surgery Council, 16 Nov. 2018, americanrefractivesurgerycouncil.org/a-popular-financing-option-for-lasik-flexible-spending-accounts/.

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