10 Reasons I Love My Flexible Spending Account
Whoever thought of this benefit is a genius. An absolute genius! Although this is my first year using the Flexible Spending Account (FSA), I love it already! Ashame I didn’t take advantage of it before now.
I use the health care option to pay for my BabyGirl’s braces. Thankfully, our insurance covered more than I expected, but I was still responsible for paying ~$3,500 out of pocket. After a $500 deposit to begin treatment, the orthodontist put me on a $125/month payment plan for two years. So far, these are the 10 most noticeable FSA advantages:
10 - I opted to contribute $1,500 for the first year only. The entire contribution is pre-tax versus claiming a tax deduction and only getting a certain % in excess of xyz “if” I itemize.
9 - It lowers my taxable income NOW, rather than keeping up with multiple receipts and trying to figure it all out when I file taxes next spring.
8 - Since I’m paid bi-wkly, FSA deducts $57.69 for 26 pay periods to spread my annual contribution over the entire year.
7 - Excluding two months when there are three pay periods, the biweekly contribution totals ~$115/month. Psychologically, this is a savings of $10/month off my orthodontist payment plan. When there are three pay periods in a month, I view it as “extra” money.
6 - The automatic, biweekly, pretax contribution of $57.69 is less intrusive than adding a new $125/month bill to my budget.
5 - I was able to pay my orthodontist bill for the entire year and submit an FSA claim for the whole $1,500, although I have not contributed the entire amount yet.
4 - The claims process was seamless and quick
1/19/07: Paid the Orthodontist $1,500
1/22/07 am: Filed claim
1/22/07 pm: Rec’d email confirmation for receipt of claim
1/25/07: Rec’d email confirmation that claim was processed
1/26/07: Rec’d a refund of total payment to Orthodontist
3 - I paid the orthodontist bill on a 1.5% cash back credit card. The FSA refund was automatically deposited into my 5.05% APY savings account. I will let it sit until the credit card statement closes, then pay in full. Double edge benefit from floating other people’s money.
2 - The orthodontist gave me a 5% discount for paying an entire year in advance. This is $75 ($1,500 x .05 = $75) I can now use and claim for other health care expenses, such as doctor visit copays, prescription med copays, eligible OTC meds, etc.
…and my number one FSA advantage:
1 - I now have one less bill to worry about paying, one less bill to juggle when money is tight.
A few warnings:
- Must read claim instructions and follow them precisely to avoid delays
- Must estimate FSA contributions very carefully - what you don’t use by the cutoff date, you LOSE
- Over estimating and being forced to make purchases you wouldn’t have otherwise only offsets the benefit.
Despite the few disadvantages, which can be avoided, I love my flexible spending account! If you have a child in braces, it alleviates some of the strain when paying for them. Now all we have to do is keep up with all those friggin appointments (lol)! So in just under two years, my baby will have perfectly straight, pretty, white teeth. 
Peace & Blessings
~*~*~*~*~*~
Work to achieve, not to acquire.
And as always, BE FABULOUS!
~SM
Work to achieve, not to acquire.
And as always, BE FABULOUS!
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Being a healthcare company, I think my soon-to-be ex (employer that is) was one of the first to offer FSA. I didn’t use it - no kids, no medical issues for myself - but I have friends who LOVE it. You go Girl!
I’ve never used an FSA, however I do have a HSA and that rolls over from year to year, so I love it. On another note, that ad that just flashed up under your post is hilarious. “Does your ride reflect your pride?” LMAO
I wear glasses so I’ve been using FSA for a long time. It’s very nice to be able to lump-sum your payments to the provider but pay for it over time!
It covers little stuff even, like Band-Aids, first aid kits, thermometers, Tylenol, etc. So even if you think you aren’t going to use it, you can stock up on emergency items if you plan it out right.
Hmm, the company that processes my DCSA and my HSA does not reimburse the total payment upfront. They pay out what has been put into my spending accounts to date.
So, when I put in the $500 claim for my daughters braces this week, I’ll be getting about $40 back twice a month (the amount that is going into the account from my paycheck, twice a month) until the $500 amount is met.
That’s fanatastic that your company reimburse before you’ve actually put the money in.
This is my third year using my FSA and I love it, as well! One of the best things since sliced bread! LOL! I lost $40 last year since I didn’t use all of my $600 contribution. Not bad, though.
girl HIGH FIVE!!! I love mine and when I started with my current employer we didn’t have one..I rallied and when the new HR director came on board she agreed and brought it on board. I LOVE IT.. it’s the BEST THING EVER..
Since I wore glasses since forever this was always HELPFUl for me!!! and especially when the kids were young and had to go to the doctor dang near every month for a shot or two or 3!!!
while my max for my year now is 2500 it doesn’t cover my surgery but its a helluva benefit to decrease my overall costs to the surgery.. pretax $$ vs after tax $$
Umm…err…uh…
I see me needs 2 block certain ads from my blog. Hmph!
Will fix when I get home.
LOL @ Serenity!
I love my FSA. I just got it for the first time this year, for the same reason: Second round of braces for the boy. And to make it nicer, all the money is put on a debit card at the beginning of the year, so I am able to use it from day one and never have to put a dime out of pocket. I love that! I won’t go without and FSA again, it’s too nice.
Oooh, I like the debit card option. No extra out of pocket costs, no claims to file, no processing, no reimbursement, etc. Wow, wish we had that!
Do you still have to submit receipts? If not, how do they know if what you’re buying is an eligible expense? Is it based on an honor system?
Actually no, it will not allow you to buy anything other than what is on the approved list. So if you try and buy milk and band aids at the supermarket, you’ll only be approved for the band aids.
So I can use my card to pay the doctor, dentist, pharmacist, buy things like asprin and other healthcare related items, etc. Now my plan also allows me to use it for certain alternative medical procedures like acupuncture and holistic medicine.
The IRS has placed restrictions on the cards. However, I got this note with my debit card:
NOTE: As of 12/18/2006, the new IRS Debit Card Restrictions have been suspended: Supermarket, Grocery Stores, Discount and Wholesale Clubs will continue to be eligible for Health Care Spending Account debit card transactions. The IRS has delayed the validation requirements for such merchants, until 1-1-2008.
Even with the restriction, I think it’s totally worth it.
We use the debit card option too. LOVE IT!
My husband had that and I thought we would lose the money but his company allows its employees to incur expenses into March 2007.
There is a FSA type account for the self-employed and unused funds can roll over, earn interest and be deducted. I plan to start one of those.
Wow! Good going! You’re so ghetto fabulous!
*sigh*
Why must the anonymous clowns attempt to break my “be nice” streak?
~SM
TRUST. Ain’t ish ghetto bout Ma.
VERY informative post. Just signed up for FSA at my new gig