Understanding Your Dental Flexible Spending Account

Understanding Your Dental Flexible Spending Account (F.S.A.) and How to Utilize it for Your Advantage

A flexible spending account (FSA), also known as a flexible spending arrangement, is one of a number of tax-advantaged financial accounts that can be set up through a cafeteria plan of an employer in the United States. An FSA allows an employee to set aside a portion of earnings to pay for qualified expenses as established in the cafeteria plan, most commonly for medical and dental expenses.  Money deducted from an employee’s pay into an FSA is not subject to payroll taxes, resulting in substantial payroll tax savings.

Currently, over 35 million workers use FSA’s to cover out-of–pocket medical and dental expenses, saving substantial federal and state income taxes in the process.  Unfortunately many patients do not fully understand the rules and benefits of their FSA plan.  Two main changes have occurred over the last two years that many are not aware of.

The first change came last year when the amount allowed to be withheld dropped from $5,000 to $2,500.  Many patients were caught off guard as they procrastinated doing large dental cases till this year only to find the amount had dropped 50%.  This change is an example of our government taking away as many options for us taxpayers as possible.

The second change is a positive one for tax payers.  Previously FSA had one negative effect for patients and that was the “use it or lose it” rule.  Recently the IRS provided added flexibility for patients with FSAs, increasing their attractiveness.  Effective this year, employees can carry forward up to $500 of unused amounts remaining at year end into the next year, as long as their employer takes action to modify their plan document. Please verify that your employer has taken the necessary steps to modify their plan document.

Understanding the rules of your FSA can be an important money saving vehicle, and the inverse is also true as many patients got caught off guard this year.  If you have questions about your FSA, please contact your human resources.

If you have questions about how you can utilize your FSA for dental treatment, please call us at Torrey Hills Dental, 858-523-1330 and we will be happy to assist.

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Born and raised in San Diego, Dr. James Tasto attended University of San Diego High School where he lettered in both golf and wrestling. After earning a Bachelors in Science from Loyola Marymount University, Dr. Tasto graduated from University of Southern California Dental School with an emphasis on cosmetics and sports dentistry.  Dr. James Tasto was selected by his peers to be included in the List of Top Dentists in San Diego for 2007 – 2013.  He appeared in the May issue of San Diego Magazine.  Dr. Tasto is also a member of D.O.C.S. (Doctors Offering Charitable Services), a local organization that offers medical services such as plastic surgery, vision and dental to the less fortunate patients in San Diego.  Dr. Tasto currently resides in San Diego with his lovely wife Traci and their 3 children. He enjoys golf, beach volleyball and playing with his kids.