Last year I forgot to sign up for the flexible spending option at my work and it was sorely missed. But this year I made sure I didn't forget to sign up, in fact I checked twice before the open enrollment was closed to make sure that they had my selections right as I was nervous I would forget to check something off.

I occasionally try to pass on to my co-workers the beauty of flexible spending accounts and I have found they either get it or they don't want to. Some think it is only if they have dependents and others don't think they will need that money set aside for them.

Personally, I never saw the need for flexible spending accounts until it was explained to me over the course of a few years. Then it sunk in and I wished I had been doing this long ago. The reason I participate in FSA is two-fold:
1. It lowers my tax bracket - Money comes out of my check every two weeks before taxes are taken out. This makes the government think that I am making less and drops me to a lower tax bracket. In fact I used a little calculator that figured this money taken out will save me $113.00 in taxes for the year. Not a lot but I'm sure we all could think of a way to spend $113.00 easy.

2. Unseen medical savings account - I know for a fact that if I have a dollar in my pocket I will have that dollar spent within 24 hours, that is why I don't carry money around with me. However, if I have set up an account that pulls money out of my check and saves it for me for a specific reason I won't spend it because I don't "see" it.

Now I can add a third reason to participate in FSA, and what got me looking into this was all this political health care talk up in D.C. which got me curious what exactly my health-plan (UHC) covered with FSA.

○ I can buy over-the-counter (OTC) drugs like allergy medicines, antacids, cold and flu meds, stop smoking meds, appendage braces and band-aids.
○ I can pay for my dentist appointments. This cost me over $500 last year when I didn't have my FSA set up - so it came out of my pocket, after taxes.
○ I will also have money to pay for another eye appointment and glasses.
○ It was also interesting to read what other areas I could use it for, such as substance abuse treatment, gender reassignment, pregnancy termination and guide dogs, handy for some, just not me.

One thing that worried me when I originally stated up with a flexible spending account was that I wouldn't use  up the money. I have no worries about that any longer as it seems that I put off going to the doctor quite often and if I get to the end of the year with money left to use I will start making appointments for myself to make sure I am healthy.

A last benefit of my FSA is that the end of the year for me is not December 31st, but instead March 15th. This is handy if I have a surgery planned for the February I can use up the previous year's money and use the money from the current year to cover expenses.

Now that you have heard about me, tell me about you:
Do you participate in FSA?
Do you use up all the money?
How much do you figure you save? (a calculator is here)

8 Comments

  1. DrSteggy // Monday, November 16, 2009 2:26:00 PM  

    THANK YOU!

    I am about to start a new job (assuming the state snafus clear this week) and one of my bennies is a Flexible Savings Account like this, and I was not sure how it worked. I've got medical and dental already through hub's job, but I need to go see my ophthalmologist soon! Thank you for the information!

  2. techwriter // Monday, November 16, 2009 2:42:00 PM  

    yes, I use mine and increase it every year. We track all of our spending, so we know how much we spent on stuff that we can pay for with FSA. Ours gives us a credit card just for FSA and the grocery store tells me how much of what I am buying so I can swipe my FSA card. If they hadn't done that, I'd never have know dandruff shampoo was eligible! I always run out of $ in the account by the time the year is half over. Oh, the other benefit is if, for example, you are having $1000 taken out for the year, and in the middle of the year you find out you need a $750 procedure, you don't have to wait for the all of the money to come out of your check. You can do it now, instead of waiting til the end of the year.

  3. Lawrence @ CRB // Tuesday, November 17, 2009 5:19:00 AM  

    I've always thought that FSA's were a great option but unfortunately don't have one myself. I have many friends that have and love them. I'm envious!

  4. Lulu // Tuesday, November 17, 2009 10:00:00 AM  

    This is my third year at my job where the FSA is offered and I did not get it set up until my second year (too late to pay for my LASIK grrrr!!!).

    I love the FSA and while I am not putting in a lot (I will definitely increase it next enrollment period) I see the fabulous benefits you mentioned. I will increase it for the tax thing...but then I also use it reimburse my doctor and dental visits and pay for my birth control. Yippee!!!!

  5. Dawn // Tuesday, November 17, 2009 1:09:00 PM  

    @DrSteggy
    Just in time... and congrats on the job!

    @Techwriter
    That is what I notice as well, it does seem to go up but tracking is key - I keep all the receipts and then add them up for the following year.

    @Lulu
    Once you get enrolled you definitely miss it. I understand that!

  6. Anonymous // Tuesday, November 17, 2009 11:34:00 PM  

    It is very interesting for me to read this blog. Thanx for it. I like such themes and everything connected to them. I would like to read a bit more on that blog soon.

  7. Hammy // Thursday, December 31, 2009 8:43:00 PM  

    Sounds like salary sacrifice. Surely your government would be better off making health charges/insurance tax deductible so that all taxpayers could benefit and not just those signed up for the FSA.

  8. Jerry // Sunday, January 10, 2010 4:14:00 PM  

    Flex spending accounts are great. My last insurance plan offered it and I miss it now. We used every last penny of it and I don't regret signing up for it at all. I hope my new employer follows my last employer's lead and offers it soon.
    Jerry