According to healthcare.gov, if you have a health plan through your job, you can use a Flexible Spending Account (FSA) to pay for copayments, deductibles, some medications, and some other health care costs, including hearing aids. Using an FSA also can reduce your taxes. How does an FSA work?
All year long via your employer’s plan, you have a designated amount of funds withdrawn from your paycheck and deposited in a special FSA account. You don’t pay taxes on these dollars. That means you reduce your taxable income by the amount you’ve set aside in the FSA. There are some limits to how you can use these accounts though.
- First, FSAs were limited to $2,650 per year per employee in 2018. If you’re married, your spouse also can put up to $2,650 in an FSA with their employer too.
- Second, you can use funds in your FSA to pay for certain medical and dental expenses for yourself, your spouse if you’re married, and your dependents.
- Third, you can spend FSA funds to pay deductibles and copayments, but not for insurance premiums.
FSAs may be used to cover costs of medical equipment like hearing aids, crutches, supplies like bandages, and diagnostic devices like blood sugar test kits. Plus, they can be used to pay for prescription medications and over-the-counter medicines with a doctor’s prescription.
You use your FSA by submitting a claim to the FSA plan administrator (through your employer) with proof of the medical expense and a statement that it has not been covered by your insurance plan. You will then receive reimbursement for your costs. Your employer should be able to tell you how to use your specific FSA.
In most cases though, you must use the dollars you’ve saved in your FSA by the end of the calendar year. That’s why it’s important to plan carefully and not put more money in your FSA than you think you’ll use, and use what’s in there by the end of the year. In many cases, if you don’t use those dollars, you lose them.
Utilizing Insurance Benefits
Insurance coverage for examinations and hearing aids varies from one insurance provider to the next, even from plan to plan under the same insurance company. If your insurance helps cover hearing aids, you need to meet your deductible before coverage kicks in. Then, the coverage is often a percentage of the total expense.
For example, if your deductible is $1,000 a year, and you’ve met that amount, and then your plan covers 80 percent of the cost of hearing aids, you would be responsible for the remaining 20%. In this example, if you were purchasing a pair of hearing aids for $4,000, your insurance plan would cover $3,200 of the cost, and you would be responsible for the remaining $800. If you have dollars still left in your FSA, you could even use them to cover your share of the cost, allowing you to use tax-advantaged dollars as well.
Some insurance companies also promote “discount options,” which may be purchased through a third party. Be sure you understand exactly what your plan offers. Often, these “benefits” or “discount options” limit you to the purchase of a specific device from a specific provider or manufacturer. They may offer a lower cost for the device only, which doesn’t include service; provides only low-end devices that may not work well for your specific hearing needs; or offer limited flexibility for the patient. In some cases, you can purchase devices of your choice with included service for the same or less than these “discounted options.”
Saving on Your Taxes
If you itemize your medical expenses on your income taxes, hearing aids qualify. Be sure to talk with your tax advisor regarding claiming medical expenses though. If you purchase hearing aids through Associated Audiologists, they qualify as medical devices and are exempt from sales tax, which may not be the case if you purchase hearing aids through retail outlets.
The Associated Audiologists staff has the expertise to check and verify your coverage, as well as provide detailed estimates of hearing aid recommendations and costs. We also can provide you with the receipts necessary for reimbursement from your FSA plan.