Flexible Spending Account (FSA) LASIK Information

What is a Flexible Spending Account (FSA)?

A Flexible Spending Account (FSA) is an employer-sponsored plan that lets you deduct dollars from your paycheck and put them into a special account that is protected from taxes. Many businesses have an FSA to help employees save on medical and other expenses not covered by insurance. A Flexible Spending Account is a type of Section 125 plan.

A "Section 125 Cafeteria Plan", often referred to as a "Flexible Spending Account", helps you keep more of your paycheck by reducing your Federal and state taxes. A cafeteria plan is a separate written plan maintained by an employer for employees that meets the specific requirements of and regulations of section 125 of the Internal Revenue Code. It provides participants an opportunity to receive certain benefits on a pretax basis, allowing you to pay certain expenses before taxes are deducted from your paycheck. Employees determine how much they will spend on uninsured medical expenses and dependent care.

Participants in a cafeteria plan must be permitted to choose among at least one taxable benefit (such as cash) and one qualified benefit.

A qualified benefit is a benefit that does not defer compensation and is excludable from an employee’s gross income under a specific provision of the Code, without being subject to the principles of constructive receipt.

• Accident and health benefits (but not Archer medical savings accounts or long-term care insurance)
• Adoption assistance
• Dependent care assistance
• Group-term life insurance coverage
• Health savings accounts, including distributions to pay long-term care services

How Does FSA Work for LASIK?

Employers withhold the employees’ determined amount from their paychecks, prior to their income being taxed. Contributions are made before federal income taxes, Social Security taxes, and most state income taxes are calculated. It is the responsibility of the employee to submit receipts throughout the year for reimbursement.

Employees benefit by not having to pay income or social security taxes on the money set aside in their FSA. Some employees can see savings on average from between 10 and 35 percent. Any money left in the FSA by years end will be forfeited to the business.

The money in a FSA account can be used for eligible health care and dependent care expenses incurred by you, your spouse and your dependents. FSA accounts are exempt from federal taxes, Social Security (FICA) taxes and, in most cases, state income taxes. Depending on your tax bracket, you may save up to 30% or more in taxes.

Please contact your employer or Plan Administrator to find out if LASIK is covered by your company’s FSA.

Flexible Spending Account Resources (FSA)