Under the new tax plan passed by Congress, elective cosmetic surgery is no longer eligible for a medical tax break. That means good-bye to the formula under which taxpayers could deduct elective cosmetic surgery, such as breast augmentation, as a medical expense after incurring medical costs that exceeded 7 1/2 percent of their adjusted gross income.
It also means a farewell to use of "flexible spending accounts" -- employer-sponsored plans to which employees could contribute tax-free toward medical procedures -- to pay for elective cosmetic surgery.
Employees must be made aware as soon as possible that elective cosmetic surgery can no longer benefit from the accounts, employee benefit consultants said, because October and November are generally the months in which employees must make decisions regarding their flexible spending account plans for the following year.
Non-taxed reimbursements from employer-sponsored health insurance plans also will be eliminated where the money would be used for elective cosmetic surgery.
The new regulation is intended to apply to purely cosmetic surgery and not to surgery for deformities arising from birth defects, accidents or disfiguring disease.
Under this definition, breast augmentation or liposuction, for example, would be ineligible for tax breaks, while procedures, say, to alter cleft palates or to reconstruct a face scarred by an automobile accident could still be tax deductible, according to a House Ways and Means Committee legislative aide.
The new rules are expected to save the U.S. Treasury about $270 million over the next five years.
They are less than pleasing to cosmetic surgeons, although some say the previous tax incentives were not great enough to lure many people to cosmetic surgery.
They also say the regulations will have little effect on a trade that caters almost totally to an upscale clientele.
"I'm sorry to see it happen, but I don't think the impact will be significant," said Paul Weiss, a plastic and reconstructive surgeon in New York. "I'm not sure people stop buying luxury automobiles, just because they put a tax on luxury automobiles."
But Alan Gold, a plastic surgeon in Garden City, N.Y., called the new regulations "misplaced" because they penalize not only the wealthy but also middle-income people who, he said, increasingly are seeking cosmetic surgery.
Gold also said he is concerned that some reasonable cosmetic procedures, such as breast reconstruction surgery after a mastectomy, would be excluded from tax-favored status.
But the legislative aide, who asked not to be identified, said mastectomy-related surgery would continue to be covered.
He also said such dental procedures as bridgework or braces would probably continue to be protected, although tooth bleaching -- a whitening technique -- might not.
Michael Dillon, spokesman for the 11,500-member American Association of Orthodontists, said the new tax rule did not appear to limit deductibility of orthodontic work. But his organization plans a detailed review of the regulation.
The popularity of purely cosmetic surgery in the United States has skyrocketed in recent years, from about 380,000 procedures performed by board-certified plastic surgeons in 1981 to 620,000 in 1988.