While many of us pay for medical expenses each year, few of us incur costs that total more than 7.5 percent of our adjusted gross income, the IRS-imposed threshold that must be met in order to qualify for a tax deduction. If this is the case, an employer-sponsored flexible spending arrangement offers an alternative way to save money on these items by allowing you to set aside up to $2,500 of pre-tax dollars each year to be used for qualified medical services, supplies and equipment. Care should be taken, however, to estimate your annual healthcare expenses when utilizing an FSA as this is a “use it or lose it” account, meaning any unused dollars are forfeited at the end of the plan year.
Office Visits and Procedures
Your FSA can be a great way to supplement your basic health insurance by setting aside money throughout the year to pay for any anticipated out-of-pocket medical expenses. Fees associated with many routine doctor visits and diagnostic services including insurance deductibles, co-pays, lab work, cardiographs and diagnostic imaging are all eligible for payment with your flexible spending account.
Flex accounts also cover the purchase of prescription drugs, birth control and insulin. Certain over-the-counter medicine such as vitamins, pain relievers, sleep aids and fever reducers may also be eligible for reimbursement through your FSA provided you have obtained a doctor’s prescription.
Miscellaneous Medical Treatments
If you are planning on undergoing a medical treatment, obtain an annual cost estimate for the services so you’ll have an idea of how much money to set aside in your flexible spending account. You may be surprised to learn that a myriad of medical treatments, some of which may not even be covered by your health insurance, may be paid for with your flex account including vaccinations, physical therapy, infertility treatment, acupuncture and even inpatient treatment for alcoholism and addiction. It is important to note, however, that cosmetic procedures are not currently eligible for reimbursement through your FSA.
Medical supplies and equipment are eligible for purchase with your FSA. This includes items such as breast pumps, crutches, hearing aids, hospital beds, oxygen equipment and even guide dogs for individuals who are visually impaired. You can even use your FSA to pay for common household items such as rubbing alcohol, suntan lotion, contraceptives and pregnancy tests.
If you wear glasses or contacts, you may consider utilizing an FSA to help cover some of your vision-related expenses such as eye exams, contact lenses and solution, eyeglasses and reading glasses. Your flex account can also be used to pay for laser eye surgery such as LASIK or radial keratotomy.
Aside from traditional medical expenses, FSAs may also be used to pay for dental service such as routine cleanings, exams, gum treatments, cavity fillings and even braces. This may come in especially handy if you don’t have dental insurance or if your plan does not cover orthodontia.
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