Q: Can I save tax money if I elect to have laser or implant vision correction?
A: Yes, there are two ways you can save tax dollars with laser or implant vision correction:
If your medical expenses reach 7.5% of your income in any given year, the price of laser or implant vision correction can be deducted for tax purposes. In May 2003, the IRS confirmed that laser vision correction indeed qualified as a medical expense for this purpose. Most people, however, end up not reaching the 7.5% threshold. Therefore, they turn to another popular program, which are FSAs.
Q: What is a Flex Spending Account (FSA)?
A: A Flexible Spending Account (FSA), is an employer-sponsored benefit that allows you to pay for eligible medical expenses on a pre-tax basis. If you expect to incur medical expenses that won't be reimbursed by your regular health insurance plan, you can take advantage of your employer's FSA, if one is offered. FSAs are also called flex plans, reimbursement accounts, Flex 125, Tax Saving Plans, Medical Spending Accounts, a Section 125 or a Cafeteria Plan.
Q: What is the benefit of using Flex Spending Accounts?
A: FSAs save you money by reducing your income taxes. The contributions you make to a Flexible Spending Account are deducted from your pay before your federal, state or social security taxes are calculated and the contributions are never reported to the IRS. The benefit is that you decrease your taxable income and increase your spendable income, which can save hundreds or even thousands of dollars a year.
Listed below is an example of savings with a Flex Spending Account*:
Gross Annual Income
Without Flexible Spending Account
With Flexible Spending Account
Above is a"real life" example of how a flexible spending program helped an employee give himself an 18.5% discount ($741) off the cost of LASIK.
*Illustration assumes federal tax at 17%; FICA at 7.65% and state tax calculation at 5% for a total of 29.65% - individual state tax will vary.
Q: How do I know if I have access to a Flex Spending Account?
A: First, check with your human resources administrator at your workplace. Then find out if there is a maximum contribution amount and ask when you are eligible to enroll.
Q: How does a Flex Spending Account work?
A: At the beginning of the plan year (which usually starts January 1st), your employer asks you how much money you want to contribute for the year (there are limits) into your Flexible Spending Account. You have only one opportunity a year to enroll, unless you have a qualified"family status change," such as marriage, birth, divorce or loss of a spouse's insurance coverage. The amount you designate for the year is taken out of your paycheck in equal installments each pay period and placed in a special account by your employer. As you incur medical expenses that are not fully covered by your insurance, you submit a copy of the Explanation of Benefits or the provider's invoice and proof of payment to the plan administrator, who will then issue you a reimbursement check.
Q: How can I be sure the money I put aside towards vision correction in my Flex Spending Account (FSA) will be used?
A: Before committing any money to a FSA for vision correction, we recommend you come in to have a FREE consultation to ensure you are a candidate. Once that has been determined, you can confidently allocate pre-tax dollars to your FSA.
Q: How do I find out if I'm eligible for laser or implant vision correction?
A: To see if you are a candidate for laser or implant vision correction, please contact Vance Thompson Vision at 1-877-522-EYES (3937) or 605-361-EYES (3937) to schedule a FREE consultation.