Plastic Surgery Costs and Flexible Spending Accounts

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Valerie DeBenedette, Senior Medical Editor

Valerie DeBenedette is a science writer who specializes in keeping people informed about medicine and their health. She has more than 20 years of experience writing for newspapers, magazines, and websites and has written about most areas of medicine. For many years, she was a contributing writer to Cosmetic Dermatology and to Drug Topics, the leading pharmacy trade magazine. She also was a contributing editor to The Physician and Sportsmedicine for many years. She has written about most fields of medicine, including dermatology, sportsmedicine, ophthalmology, general surgery, orthopedics, and women's health; as well as public health policy and the pharmaceutical industry. In addition, she is the author of Caffeine, a book for young people. She is a member of the National Association of Science Writers.


December 05 2008

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Many companies now regularly offer their employees the ability to participate in a health flexible spending account (FSA). This type of account is one of the newer health benefits that are being offered alongside health insurance. One of their primary benefits is that they give people tax advantages to offset health care costs.

An FSA works by allowing you to set aside a percentage of your income before taxes. Other names for these accounts include reimbursement accounts and flex plans. An employer can also contribute to this account, but usually the account is your own money. You can then use monies from your FSA to pay for qualified medical expenses. This sounds like you are using your own money whether you have an FSA or not, but because your contribution is deducted before taxes, you save money. These tax savings can add up to a few hundred dollars a year. (You can check out an example of this savings at http://www.aetna.com/plans-services-health-insurance/detail/health-expense-plans/hra-hsa-fsa.html.)

Many people use their FSA to pay for the parts of medical bills that are not covered by their health insurance, such as the annual deductible and drug or office visit copayments. It can also be used for long-term medical or dental treatments like orthodontia, and to purchase over-the-counter medications and health supplies. Some FSAs issue you a card that you can use very much like a credit card to access funds in the account.

The down side is that you lose anything in the FSA that you don't spend by December 31, although some plans allow you a grace period of one or two months into the next year. Up to one third of people with an FSA lose an average of $168 each year by not using the full amount in their account. So it pays to make sure you are deducting an amount from your paycheck for your FSA that reimburses you for your expenses, but that does not outstrip the health costs for which you can use the plan.

Which brings us to cosmetic medicine: Can you use the money in your FSA to cover the costs of cosmetic surgery or other cosmetic procedures, such as teeth whitening or Botox® Cosmetic injection? The unfortunate answer is no. You cannot use FSA monies on anything intended to improve an otherwise normal appearance, such as the cost of plastic surgery. For example, if you break your nose in a car accident, you can use the FSA to cover surgery to repair the injury, which is considered reconstructive plastic surgery. However, if you just want to change the shape of your nose, you can't because that is considered cosmetic plastic surgery. Similarly, funds in your FSA can be used for breast reconstruction after mastectomy, but not for cosmetic breast augmentation.

However, there are costs related to cosmetic surgery for which you may be able to use your FSA, such as the fees or copayments for blood tests or a physical before your surgery. You may also be able to purchase prescription antibiotics or pain relievers that your cosmetic surgeon prescribes for you, since most FSAs will cover prescription drugs. You can also use it to buy health supplies such as the over-the-counter pain relievers and bandages or dressings that you need. Whether an FSA can be used to purchase a compression garment is more of a gray area, since many of these garments are only used after cosmetic surgery.

If you do use your FSA for these items (or for anything else), make sure to keep all receipts. The company that runs the FSA for your employer may ask you to substantiate your purchases.

The Internal Revenue Service has two publications that help explain FSAs and deductible medical costs. They are IRS publication 969 (http://www.irs.gov/pub/irs-pdf/p969.pdf) (which also includes information about other types of health savings accounts) and publication 502 (http://www.irs.gov/pub/irs-pdf/p502.pdf). You can also ask for advice about what you can use your FSA for from a good certified public accountant or your human resources department at work.

Here is a tip: If you have an FSA with money in it that you need to spend before the year ends, take a look inside your medicine cabinet at home. Check the expiration dates on your first aid supplies and any cough and cold remedies you keep in stock, but not vitamins or toiletries, which are not covered. Get rid of anything that is out of date and use your FSA to start the New Year with fresh supplies.