Flexible Spending Accounts (FSAs)

[Texas Proud]

I just generally have a hangup with any system where you effectively pay money upfront with the intention of saving money later. A FSA would be one example. Warranties are another. A club card at Barnes and nobles is another example.

Its all the same. You start in the hole, and because you know you've got that money you have to spend, you probably end up making doctor visits you'd otherwise not even bother going to.

You see ads everywhere that try to brainwash you that in some kind of scenario, spending money is "saving money". I'm just amazed at the amount of people that actually fall for it.

So put your 1K in a FSA and "save money". In the meantime, i'll put my 1K in a hot stock sector and make the same thing you did without the spending obligations. I realize that "saving" 360, and spending 1K I wouldnt have otherwise in the process of saving the 360, leaves me poorer than just not even bothering with it at all.

I actually have a paranoia belief that everyone's out to get everyone else's money. Humor me for just a week with that mindset and amaze yourself how throughout the day as to how true that actually seems to be. They came up with this FSA as just one more strategy to separate you from your money.

I feel like FSA like Dave Ramsey feels about credit card deals. Sure, in theory you might win at their scheme, but if you keep playing with snakes, you'll eventually get bit. They're counting on it. They dont care about you.

Wow Azz.... a bit parinoid there...

I put the minimum $240 in my account... I pay my dentist appointments.. two a year... I pay my annual exam (just started them.. but it is recommended and it is probably a good spend)... I get a prescription every once in awhile... and if I have any money left over, I can buy non prescription drugs that I need for allergies etc.. and I can even get reimbursed for my miles I drive to and from the doctor...

I only save a few dollars.. but I will never spend less than $240 in a year in medical.... just won't happen.. and since it is taken out of my paycheck during the whole year... there are times I can spend all the money in a few months and am MAKING money on getting services with an interest free loan..

So, be paranoid and do not save money.. that is your choice..

 

[spideyrdpd]

You can go to drugstore.com and find the fsa link and spend it all online
I love the fact that its now a credit card. Filling out the paperwork takes less time than it does to type this post.
I did spend a tad less the first year but its not a big deal to go buy prescription sunglasses and make up whatever the difference is.
They also push this as a reason to take the higher deductable health plan . It really makes a big difference in what they take out of the check for the health insurance. Plus my company kicked in some money if you went for the higher deductable plan. Although since I am not "healthy" (diabetic ) I went with a different plan
Rob

 

[jazz4cash]

(OK, nothing's completely predictable -- you could die,

But at least if you do die, get marry, have a kid or change employment (including spouse), these are considered "change of life" events and qualify to let you out of the deduction schedule.

Another thing that gets missed is that FSA contributions are not subject to FICA taxation, so that's another 7.x % tax savings. I wasn't sure about this one, but I just double checked my paperwork. I put in 4k last year and it was gone in Feb (did the pre-expense bit with DD's braces)

 

[d]

i believe that beginning this year the fsa will cover spending through 15 months ... which means if you don't spend it within the currect year as planned, you've got an additional 3 months before you lose it. this considerably reduces the probability of losing any contributions and makes such accounts considerably more attractive.

 

[jazz4cash]

i believe that beginning this year the fsa will cover spending through 15 months ... which means if you don't spend it within the currect year as planned, you've got an additional 3 months before you lose it.  this considerably reduces the probability of losing any contributions and makes such accounts considerably more attractive.

Actually, it started in the '05 calendar year. It was not very well publicized for our plan. In fact, when I first applied for funds this year, the admin took them from the '06 account even though I had '05 funds available, so expenses in the 1st quarter of the year can be reimbursed from either account. You are correct that it gives me more confidence in estimating my contribution.

 

[Craig]

What's interesting about this debate is how seldom anyone leaves money on the table with these plans.  With the requirement that employers must reimburse 100% of the employees submitted expenses up to the total of their annual deductions, it is far more likely employees walk away with more cash than they have deducted, when they leave the company early.  And, even that isn't a common issue.

Employees save roughly 30%, and employers save 7.65% of every dollar run through FSA's.  Yet it remains the most commonly misunderstood employee benefit.

Even if I could only run $100 through it, I'd use an FSA. I'm not so rich as to be willing to just throw $30 away. I suppose I'm cheap.

 

[SteveR]

I have been using a FSA for several years and have yet to leave money on the table. We usually sign up for $3000 per year and have always had more to claim than that.

Saving some tax money while in the higher brackets helps some too. It is our money and we just pay ourselves back. I do the whole year all at once and make one filing after the end of the year....takes about an hour tops. But I also have a running file with all the receipts in it to make the job easier.

This year we could have taken our twice that and still would not have left a penny on the table. Unusal year to be sure with all of DW's hospital bills this summer.

Unless you are in a high tax bracket and you have a significant amout of medical bills within the year a FSA may not be of much value to you. We find value in it but others may not. Do what works for you.

 

[eridanus]

When I had one, I would put enough in the FSA to cover dental checkups and the co-pays. I think they can also cover child-care expenses.

Like Charles mentioned, I've left early and received the full benefit. I signed up for $250/year deducted bi-weekly, left in May, and was able to use all $250 of it. This could be particularly effective if you know you're going to be quitting....

 

[Rich_by_the_Bay]

Don't think this was mentioned:

I believe that if you have an FSA it may make you ineligible for a high-deductible/HSA account, so be careful about this.

We use our FSA heavily. If you have a healthy year, you can always sneak in a dental cleaning a month early, buy an extra pair of prescription sunglasses.

One year I had $700 bucks left on 12/30. Even though I didn't really need them right then, I got a pair of expensive bifocal glasses just to spend my money. On Jan 1 in a post-new year's moment, I sat on my previous glasses, totalling them.

Always able to find a way to empty it by year's end.

 

[SecondCor521]

On the plan I used to have, you can also buy OTC medical stuff like bandaids, vitamins, etc. You could always make a Costco/Walgreens run at the end of they year and be stocked up on that stuff. Probably not practical for large amounts, though.

2Cor521

 

[Lusitan]

I just started a new job and so I'm looking at the FSA account for medical expenses. My wife and I are expecting our first child in December. We have decent insurance but I have no clue how much extra medical expense we'll incur that won't be covered by insurance.

I realize every situation is different based on health and insurance policies, but I'm curious - for those of you out there who have decent health insurance, and a relatively healthy baby, how much did you spend on medical stuff for the baby that wasn't covered by health insurance?

Thanks!

 

[maddythebeagle]

Even if I could only run $100 through it, I'd use an FSA. I'm not so rich as to be willing to just throw $30 away. I suppose I'm cheap.

30 bucks! I think we have had some threads of folks picking up pennies and nickels...

 

[justin]

I realize every situation is different based on health and insurance policies, but I'm curious - for those of you out there who have decent health insurance, and a relatively healthy baby, how much did you spend on medical stuff for the baby that wasn't covered by health insurance?

Labor/delivery for us in august was ~$9000 rack rate, about $4500 after the health insurance discounts applied. We have a 10% coinsurance (health ins pays the other 90%), so we'll end up paying about $450 out of pocket for the delivery. Well-baby visits occur at something like 1 week, 1 month, 2 months, 3 months, 6 months, 9 months, 12 months, 15 months, 18 months, 2 years, etc. The first year or so you will get socked with the wellbaby copays or coinsurance. Babies can get sick and a low grade fever may require a doctor's visit. Babies get dozens of vaccine shots now it seems - not sure how your health ins. would cover these - our vaccines were included in the dr visit copay which is $25 for us.

hope this helps.

 

[Alex]

I have used the FSA twice in the last 10 years - 3k each time. Both times for major dental work. It worked out great because I knew that we were going to have the work done and I planned for the expense. As for paperwork, it was easy. I sent in one claim form, a week or two later the money was transfered directly into my checking account.

 

[Lusitan]

Thanks Justin. I guess planning for at least a couple hundred bucks worth of copays would be a good idea.