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I'm planning on getting LASIK Eye Surgery. I'm expecting the cost for both eyes to be around $5,000 so the $2,500 contribution limit per year the IRS imposes prevents me from covering all of it with my FSA account.

My employer doesn't offer a grace period when the year ends to spend the money in the account.

If the surgery costs $5,000, can I pay for all of it out of pocket and then reimburse myself $2,500 the first year, and then the remaining $2,500 the next year, or do I have to reimburse the bill all at once?

If this is not an option, then what other options could I have to cover the entire surgery with my FSA account?

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You cannot carry bills over to the next year. You can only get reimbursement from your FSA for amounts incurred in the period the FSA covers, so if your FSA covers calendar year - the next year's FSA won't be able to provide reimbursement for the previous year bill.

Note that asking the doctor to split the bill and bill you on different days won't work either because you incur the cost on the day of the surgery. Misreporting to overcome that limitation is considered insurance fraud (a felony).

If this is not an option, then what other options could I have to cover the entire surgery with my FSA account?

None.

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    Actually I think there is an option: do the two eyes in separate surgeries that are paid for separately. I've heard of people doing this even without the financial reasons, to avoid having both eyes physically sensitive at the same time. – BrenBarn Dec 31 '14 at 1:33
  • What if the $5000 covers the surgery and follow-up care (say, 4 check-ups over the next year)? Then the cost of the surgery must be <$5000 by definition, so could you have the doctor bill you, say, $4000 for the surgery and $250 for each checkup? How about $3000 for the surgery and $500 per checkup? – dg99 Dec 31 '14 at 16:43
  • What if the doctor provides a payment plan? Say, about $200 monthly payments over 24 months. Then, can those $200 be paid with the FSA account? – AxiomaticNexus Dec 31 '14 at 18:18
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    @YasmaniLlanes that's exactly what I mentioned in my answer. You get reimbursed when you incur the bill. Check BrenBarn's suggestion though. – littleadv Dec 31 '14 at 20:50

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