AAO reminds families about changes in FSA rules
ST. LOUIS, Mo., USA: For families considering orthodontic treatment, using a Flexible Spending Account (FSA) has traditionally been a great way to help pay for treatment with tax-free dollars. These accounts, which are offered to approximately 14 million Americans through their employers, allow workers to set aside funds in a tax-free account and use them for non-covered medical expenses, such as deductibles, co-pays and medical services like orthodontics, dental and eye care.
However, significant cuts to the program are hurting families’ ability to pay for out-of-pocket expenses.
“More than 60 percent of orthodontic patients use FSAs to pay for treatment,” said Gayle Glenn, DDS, MSD, president of the American Association of Orthodontists (AAO.) Prior to the enactment of the Patient Protection and Affordable Care Act, the Internal Revenue Service permitted employers to enact any maximum annual election for their employees.
Most companies allowed employees to set aside up to $5,000. But beginning in 2013, the Patient Protection and Affordable Care Act amended Section 125 to lower the annual limit to $2,500 for the first plan year beginning after Dec. 31, 2012.
“Families with children and adults considering orthodontic treatment need to be aware of this change and adjust their financial plans accordingly,” Glenn said. “For many people, this represents a 50 percent reduction in benefits.”
According to Glenn, there is a small silver lining. “The IRS recently issued a new ruling which allows account holders to roll over up $500 into the following year,” she said. “This helps ease the restrictive ‘use-it-or lose it’ requirements.”
Many companies are currently engaged in open enrollment for FSAs. Families and individuals who are considering orthodontic treatment are encouraged to review the new rules carefully before making their choices.
“Many AAO-member orthodontists offer flexible payment plans,” said Glenn. “If you or your child need to begin treatment, consult an orthodontist to help you maximize these important accounts.”