Insurance can be a bit of a pain to sign up for, but in the end, most people are happy they have it. However, there are times when insurance doesn’t cover the full cost of an expense. This is where pre-tax accounts come in.
There are different types of pre-tax accounts. If you have an HSA but you want to let the balance build up, you can pair it with a Limited FSA to cover out of pocket vision and dental expenses.
Let’s go over how it might look to use vision and dental insurance with a Limited FSA to cover out-of-pocket expenses.
What can I expect insurance to cover?
Depending on your carrier, what your insurance covers will vary. In most cases, you can expect insurance to cover all or a portion of your expenses. As the title indicates, we’ll only be addressing vision and dental expenses.
When it comes to dental insurance, according to the National Association of Dental Plans, dental plans generally have a 100-80-50 rule. This means they will cover 100% of the cost for exams and cleanings, 80% of the cost for procedures like fillings, and 50% of the cost for major procedures (like crowns). They may also cover x-rays and treatments like fluoride.
Vision expenses that are covered by insurance generally include eye exams and vision tests, and a fixed cost for prescription eye wear (like glasses and contact lenses). Some plans may also partially cover procedures like Lasik.
Insurance takes care of a lot vision and dental expenses. Sometimes though, it doesn’t cover everything. That’s where a Limited FSA comes in.
Covering out of pocket expenses
A Limited FSA is a pre-tax account designed to pay exclusively for out-of-pocket vision and dental expenses. If your employer offers a Limited FSA, it can be a great tool to cover any gaps left by insurance. There are many items that are considered Limited FSA eligible expenses.
What counts as a Limited FSA eligible expense?
Some sample expenses include:
- Dental services and procedures (including correction procedures)
- Eye exams
- Eyeglasses
- Fluoridation services
- Laser eye surgery (Lasik)
- Orthodontia
- Vision materials (e.g. contact lens solution)
How do I pay for Limited FSA eligible expenses?
You can pay for the out of pocket expenses with a benefits card. Your insurance will cover a portion of the expense automatically. You can pay with your benefits card for any remaining amount, as long as the visit was for vision or dental purposes.
Common expenses that a Limited FSA doesn’t cover
Certain items might not be eligible under your Limited FSA. This includes some Over the Counter items, like eye drops. However, depending on the brand, some eye drops might be eligible and others may not. You have a few options to determine what will be eligible: go to a merchant that mostly sells eligible items or check a list of eligible items.
If you’re interested in a Limited FSA, but you are currently enrolled in a General FSA, you can find out more about your account options here. You can also ask your HR director if it is offered at your company.
Reading for employers: The Case for a Limited FSA.
