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Since 2013 is almost here, I wanted to send out a quick reminder for those readers with Flexible Spending Accounts to use their balances before they lose it.
We just got a postcard from our dentist about taking advantage of all of our benefits and I thought sending out a reminder could help a few people.
What's a Flexible Spending Account?
Basically with a Flexible Spending Account through your employer, you can take some of your pre-taxed money and have that allocated in a fund for medical expenses.
These can include things like deductibles, office visit co-pays, and prescriptions. Spent wisely, it can mean huge tax savings for you.
If your employer offers this account, you two may want to sign up for it now during open enrollment.
Check with your Human Resources Department to see what benefits you're entitled to as part of your pay package.
Use Your FSA Benefits
While Flexible Spending Accounts can be a great financial advantage for your family, they have a downside of expiring at the end of the year.
That means if you don’t use it, you’ll lose it. As of 2011, there has been a number of changes to what can be covered with your FSA. According to the IRS’ announcement:
The Affordable Care Act, enacted in March, established a new uniform standard that, effective Jan. 1, 2011, applies to FSAs and health reimbursement arrangements (HRAs).
Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained.
The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles.
The new standard applies only to purchases made on or after Jan. 1, 2011…
That means that you should start calculating carefully what you’ll most likely need for next year so you won’t have some of your money wasted.
By the way, some FSAs are labeled as Health Spending Accounts which can be easily confused with Health Savings Accounts which do NOT expire.
Talk with Human Resources if you are confused as to which type of account you currently have.
Calculating How Much to Contribute To Your FSA
If you're signing up for the first time for the FSA to use in 2013, my advice is keep your estimates conservative.
Try looking at this past year and see how much you had to pay out of pocket for medical expenses.
Examining over our actual spending this past year I was surprised to find out that our biggest expenses weren't the baby visits (as I thought it would be), but my contacts and glasses, dental work and our deductible.
Thoughts on Flexible Spending Accounts
I'd love to hear from you about your spending this past year. How many of you took advantage of your flexible spending account this year?
Have you used all of your benefits or do you still have some leftover? what was your biggest medical expense this year?