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How to Use Your FSA or HSA on LASIK

Using a tax-free Flexible Spending Account (FSA) or Health Savings Account (HSA) is a great way to pay for LASIK or other eye surgeries, potentially saving 20-30% for eligible patients. Funds in these accounts, whether contributed by you or your employer, are tax-free and do not count toward your taxable income. This means FSAs and HSAs can help you access medical services, including elective procedures like LASIK, while lowering your overall tax liability.

Is LASIK a Qualifying Medical Expense?

The IRS allows funds in HSAs and FSAs to be used for expenses related to “the diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body.” This includes laser eye surgery, making LASIK an eligible expense.

This designation is important because LASIK is often considered an elective procedure, and most insurance plans do not cover it. Many individuals rely on their HSAs or FSAs to pay for medical services and treatments not typically covered by insurance, such as chiropractic care, therapeutic massage, acupuncture, physical therapy, and even preventive healthcare or alternative therapies.

If you plan to use HSA or FSA funds, ensure the expense meets IRS guidelines. LASIK in Oklahoma City qualifies, but it’s essential to keep receipts and documentation from your procedure or purchases in case the IRS requests proof of eligibility.

What Is an FSA?

A Flexible Spending Account (FSA) is a tax-advantaged account that lets you allocate pre-tax dollars from your paycheck to cover eligible medical expenses. FSAs are typically offered as part of an employer-sponsored health plan.

How you use your FSA depends on your employer’s setup. Some FSAs provide a debit card for direct payment of qualifying expenses, while others require you to pay upfront and submit a claim for reimbursement.

Eligible expenses include doctor visits, prescription medications, dental treatments, and LASIK. The primary benefit of an FSA is that it lowers your taxable income, reducing the amount you owe in taxes.

What Is an HSA?

Health Savings Accounts (HSAs) are tax-advantaged accounts designed to help cover eligible medical expenses. Unlike FSAs, HSAs can be either employer-sponsored or individually opened, provided you are enrolled in a high-deductible health plan (HDHP) with a deductible exceeding $1,600 for individuals or $3,200 for families.

HSAs provide a triple tax benefit: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are also tax-free. This makes HSAs an excellent option for saving and investing toward future healthcare needs, including LASIK.

How Do I Save on LASIK With an FSA or HSA?

Flexible spending accounts and health savings accounts are both healthcare plans that reduce an employee’s income tax liability and allow you to pay for medically-related expenses, including elective procedures such as LASIK. The pre-tax savings may be significant.

With an FSA, you typically pay for the medical expense upfront and then submit a claim, along with a receipt or bill and proof that the expense is not covered by insurance, to receive reimbursement. Some FSAs provide a debit card for direct payment of eligible expenses.

An HSA functions more like a savings account for medical costs. You can use an HSA debit card to pay providers directly, reimburse yourself after paying out of pocket, or access funds as needed to cover qualifying expenses.

Are FSA and HSA Funds “Use It or Lose It”?

In 2021, the IRS updated its “use it or lose it” policy for unused FSA funds. Employers now have two options for handling leftover balances. They can provide a grace period of up to 2.5 months for employees to spend their funds, or they can allow participants to roll over a portion of their funds into the next plan year, with any remaining balance forfeited.

HSAs, on the other hand, do not have a “use it or lose it” rule. HSA funds roll over indefinitely, enabling you to build savings over time for medical expenses, including LASIK, as long as you are enrolled in a qualifying HDHP.

Do FSA Funds Roll Over?

FSAs typically follow a “use-it-or-lose-it” rule, where unused funds at the end of the year are forfeited. However, some employers offer a rollover option, allowing a portion of unused FSA funds to be carried over into the following plan year. For 2024, the maximum carryover amount is $640. This rollover amount does not count toward the annual contribution limit.

What Is the FSA Grace Period?

The FSA grace period is an extension beyond the end of the plan year, allowing you additional time to use your remaining FSA funds for medical expenses.

The IRS permits a maximum grace period of two months and 15 days, though employers may choose to offer a shorter extension. Any unused funds remaining after the grace period ends will be forfeited.

If your employer provides a grace period and follows the IRS’s maximum deadline, you have until March 15, 2025, to spend your 2024 FSA funds.

Learn More

At nJoy Vision, we’re committed to making your LASIK experience smooth and affordable. Depending on your account balance, your HSA or FSA funds may cover all or part of your LASIK procedure. If the funds don’t cover the full cost, you may have to pay the remaining amount out of pocket.

To help cover any remaining costs, we offer special financing options through our trusted partner, CareCredit. We also work with many vision insurance providers that may offer discounts on laser eye procedures like LASIK. Be sure to ask an nJoy Vision associate if your insurance includes partial coverage or special discounts.

You can learn more about our financing and payment options on our LASIK Financing page. Contact nJoy Vision at (405) 842-6060 or request a free consultation online to learn more about LASIK in OKC.

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