Maximize the Benefits of Your Flexible Spending Account
It’s open season to enroll in my employer’s 2008 Flexible Spending Account (FSA). For those who don’t know, an FSA allows you to set aside pre-tax dollars for eligible health and childcare expenses. Last year I mentioned 10 reasons why I love my FSA and they are exactly why I decided to sign up again this year.
The 2008 FSA benefit period runs Jan 2008 through mid-March 2009 and all claims must be filed NLT 30 April 2009. Because it’s a use or lose program, you have to be careful how much you elect to contribute. So to make sure I don’t give away hard earned dollars, I plan to contribute $1,000 and spend it on the following:
BabyGirl’s Orthodontia: she was recommended for braces in March 2006, then after a few extractions and financial planning, she began treatment in October 2006. I expected her to be in braces for at least 2 years, but it looks like she’ll have them removed sometime around April 2008 – approx 1.5 years. As mentioned last year, I used the FSA to make advanced payments and now there are only three remaining. One will be applied before the 2008 FSA period begins and the other orthodontia expenses include:
- January 2008 payment: $125
- February 2008 payment: $125
- Top Retainer: $275
- Bottom Retainer: $275
In January, I will pay for everything (two payments and two retainers) with my credit card. I’ll take the receipt, file a claim for the entire $800, and get fully reimbursed from my FSA. This process takes 5-7 days to complete. Then I’ll pay the credit bill in full with the FSA reimbursement check.
There are multiple advantages to doing this:
- It will relieve my responsibility to the orthodontist.
- I may get a discount for advanced payments if the new orthodontist offers the same incentive.
- I will earn cash back on my credit card.
- I will make small, tax and interest free payments to FSA vs. making large after tax payments to the orthodontist. With 26 pay periods spread over a year, the total allotment to FSA would be $38.46/pp.
But remember, if you don’t use it, you lose it. Unless there’s a qualifying life changing event (marriage, divorce, baby, death, etc.), contribution amounts can not be changed, stopped or refunded. So this leaves me with about $200 to spend before mid-March 2009.
I plan to use the remaining $200 for:
- BabyGirl’s acne treatment (Pro.activ is now reimbursable)
- PCP and Specialist(s) copays
- Prescriptions meds
- Eligible OTC meds and supplies
Childcare expenses are easier to project because the payment is fixed, but even healthcare expenses add up quickly. The important thing is to have a plan on how the money will be spent before electing a contribution amount. They are so not playing with that use it or lose it requirement.
~*~*~*~*~*~
Work to achieve, not to acquire.
And as always, BE FABULOUS!
This blog is all about Finance, Fitness, Fashion & Fun - the sum of my life. If you like what you've read, feel free to subscribe via (feed reader) or (email) to follow along.
in the last couple of years, two intances for me and one for my wife, they have asked for the only back-up receipts we did not have “detailed service” information for. Ended up being almost a big as hassle as the $350 it saved us.
maybe because i work for the state, but this year my benefits office announced that we could submit claims for up to 3 months post-fiscal year.
The way it works, however, is that you submit the claims during that 3 month period to the new FY account (if you have one) and they just add whatever amount you submitted (up to the amount you have left in last years account) to the new account. I’m glad they did this as I ended up not getting dental work done last year, leaving me with a lot of extra money at the end of the year. Although i did buy a LOT of contact lens solution, cough drops, etc I still had $ left over, which when transferred over, compensated for this year’s unexpected increase in prescription costs. don’t know if this ‘carry over’ is true for anyone else’s employer. I don’t know if this is a one time thing, either, as this was my 1st year with the employer.
I did this last yr for orthodontia expenses & birth control pills. I ended up underestimating (big time) how much I’d need for the ortho but better that than over estimating. For next yr I alotted $350 to cover my bc pill copays (25/mo) and a little extra for contact lens solution and such. It’ll be about $29/pay (I get paid monthly) I believe.
I love that plan!
I love it!!! I just enrolled in mine too and used the same amount $1000!!!! 2007 I used it to offset my expenses for lasik!!! Now for 2008, it will be copays, prescriptions, contacts & glasses for Lil BK and polarized sunglasses for me.. :) they are expensive but I can get a couple of NICE pairs since Ihad lasik they are covered.. :D teeheheee