Plan on Flexible Spending Accounts
Whatever you call it — your FSA, Section 125, or the Ol’ Cafeteria Plan — you can save money with a Flexible Spending Account!
Some employers offer Flexible Spending Accounts (FSA), which allow you to pay for qualified medical expenses with pre-tax dollars. Because FSA money is tax exempt, you save almost one-third on the qualified expenses.
Planning is required because only $500 of any unused funds can roll over at the end of the year. But if you have elective surgeries coming up, are on maintenance medications, or have a chronic condition in which you have regular care, you can calculate your expected expenses and save significantly.
Services must be provided during the coverage period, but receipts can be typically turned in one fiscal quarter after the end of the coverage period.
Account limits vary from employer to employer. Any unused money is forfeited and typically put back into the benefit budget to keep the cost of management fees down.
Employees set up an account during open enrollment after carefully calculating how much to put into the account.
Each pay period, money is deducted before taxes. There is typically a $10 per month minimum.
Health care related expenses that are eligible for FSAs include:
true or false (mouseover to reveal the answer)
- Health plan deductibles and co-payments
- Eyeglasses and contact lenses
- Orthodontic services
- Driving lessons
- Hearing aids
- Prescription drug costs
- Teeth whitening
- Ambulance fees
And, when prescribed by your provider:
YES! – Over the counter medications (ask your provider for a prescription!)
YES! – Smoking cessation programs and nicotine replacement therapy drugs
YES! – Vitamins and supplements
YES! – Massage and acupuncture
YES! – And fees for weight management programs