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How may I use a flexible spending account (FSA) to offset costs for orthodontic services?
A flexible spending account is a financial account you put money into that you can use to pay certain out-of-pocket healthcare and dependent care costs. You don’t pay taxes on this money. With an FSA, you can set aside up to $2,850 in pre-tax wages during 2022 for out-of-pocket medical expenses. The amount limits are subject to change annually. Depending on your tax bracket the tax savings could cover from 18 to 35 percent of the cost. What many people don’t know is that your FSA funds can help offset the high cost of orthodontic services as well.
Single Year Savings Comparison
Without an FSA:
$212.50 Monthly budget for orthodontic expenses
– $46.75 Taxes deducted on $212.50
$165.75 Amount left for out-of-pocket orthodontic expenses
With an FSA:
$212.50 Monthly FSA deposit for orthodontic expenses
– $0.00 Taxes deducted on $212.50
$212.50 Amount left for out-of-pocket orthodontic expenses
Annual Savings (Example):
$46.75 x 12 = $561
Use $561 towards orthodontic expenses from income tax savings using a flexible spending account.
