November 5, 2012 — This week on For Your Benefit join hosts Bob Leins and Tammy Flanagan as they begin their series of Open Season Shows, which gives you, the listener, a chance to hear options and consider the choices for health and dental benefits coverage for next year.
Today, Bart Turney from FSAFEDS joins them in the studio to discuss flexible spending accounts and why they are good choices to help with health care AND day care expenses.
What is FSAFEDS?
It’s an account to which you contribute money from your salary BEFORE taxes are withheld, then get reimbursed for your out-of-pocket health care and dependent care expenses.
Why Should I Care?
If you pay co-pays, co-insurance, deductibles or buy over-the-counter medicines, or have other medical expenses that your regular insurance doesn’t pay for, or pay for child care and/or adult day care expenses, or have vision and dental expenses – then you are already paying for those expenses and NOT saving any money. But when the FSAFEDS reimbursement arrives – it’s like getting an instant pay raise!
How do I SAVE MONEY?
Let’s say you make $1,000 per pay date – that means you pay taxes on $1,000 per pay date. If you put $20 per pay date in FSAFEDS – then you only pay taxes on $980 per pay date. You save money by paying less tax. You get the money in your account(s) back when you submit timely claims for eligible expenses. This is an easy way to SAVE MONEY on the services and products that you are already spending money on.
How much should I contribute to my flexible spending account?
If you decide to participate, you must put in at least $250 for the year, and no more than $2500. Turney says you should calculate how much you wil spend out of pocket for medical purposes and put that monay into an FSA. “This is not something to save for a rainy day, save for unanticipated medical expenses,” he tells Leins and Falanagan. “This is to help you save taxes on those out-of-pocket expenses that you’re going to have anyway.”
Which out-of-pocket expenses are eligible for reimbursement?
To find out what sorts of medical expenses are covered by the terms of your FSA, visit the Eligible Expenses Juke Box on the FSAFEDS website.