A Flexible Spending Account is a tax-advantaged account for use in paying for qualifying medical expenses. Many employers throughout the United States offer FSAs to employees, who use the pre-tax funds that they set aside to cover health-related expenses not covered by their medical or dental insurance programs. FSAs are exempt from federal taxes, Social Security (FICA) taxes and, in most cases, state income taxes.

“The FSA can be a great option for funding treatment or for bridging the gap between the final cost and what is covered by dental insurance,” says Dr. Klarsch. “Paying through an FSA makes it possible to reduce out-of-pocket costs by nearly one third, because the money goes into the FSA account untaxed.” For some prospective patients, a 30 percent or greater reduction in out-of-pocket expenses might make the difference in whether they consider orthodontic treatment as a realistic possibility.

While the FSA usage rate among orthodontic patients appears fairly strong, the survey results also indicate that many patients are not using them to fund treatment, and it is possible that many non-users could use FSA accounts if they chose to do so.

Some human resource experts have suggested that employees may be discouraged from using FSAs by the fact that unused FSA funds must be forfeited at the end of the year. Thus, there may be uncertainty about how much money to set aside and fear that some funds could be lost if they cannot be applied to health-related services.

“Unlike some health-related expenses that people cover using FSA funds, orthodontic treatment is a planned event,” says Dr. Adusumilli. “We can help a patient, or a patient’s parent, determine exactly how much money to set aside per year so that no funds will be lost. This is an advantage that some people who have access to FSAs may not consider automatically, so we discuss this possibility very specifically. Orthodontic treatment is an ideal fit for FSA financing. At least 50 percent of our patients use FSAs to fund some of their treatment costs.” *

Prospective or current orthodontic patients who have access to FSAs, but who are not familiar with how they work should contact their employers’ human resource managers.  Also, general information available on the Web may be helpful, such as the About.com financial planning page overview of FSAs at http://financialplan.about.com/cs/insuranc1/a/FlexSpendPlan.htm.

* The health care reform plan passed by Congress and signed by President Obama earlier this year included a provision capping the amount that an individual can defer into an FSA each year at $2,500, with indexing for inflation, beginning in 2013. (The original proposed cap was set at $2,000, but was increased by $500 after lobbying efforts by the AAO and other groups.) Thus, a two-parent household in which both parents’ employers offer FSAs could be eligible to set aside up to $5,000 per year even after the new health care law takes affect. Currently, set-aside caps vary by employer.

Call Coral Orthodontics at 954 – 418 – 2354 to get more information about how you can use FSA to fund your Orthodontic Treatment.