Want to use pre-tax dollars for healthcare expenses?
If you don’t have a high deductible health insurance plan and want to set aside pre-tax dollars for healthcare expenses, a Flexible Spending Account (FSA) may be just what you’re looking for.
A Flexible Spending Account is an employer only option. If your employer offers an FSA, take time to see what is covered and crunch some numbers. Here are a few reasons to consider utilizing an FSA.
No high deductible health insurance plan? No problem…
Flexible Spending Accounts are offered by employers.
If you don’t have a high deductible health insurance plan, but your employer offers an FSA, take a hard look at your healthcare budget and see if the numbers make sense for you.
You can use your money from day one…
The entire amount you contribute to your FSA is available at the beginning of your benefit year (or shortly after the first contribution is made).
For example, let’s say you add $2,000 to your FSA for the year. You’ll likely contribute roughly $80 per paycheck. The entire $2,000 is available to use at any time even though you only make small contributions during the year.
It’s worth mentioning that if you leave a position before the year is over, the money in your FSA doesn’t have to be paid back.
Set and forget it healthcare savings
FSA accounts are typically established during open enrollment periods. Once the paperwork is taken care of, the contributions are taken out automatically making saving for healthcare easy.
Most FSA’s do not renew automatically, so you’ll need to re-enroll each year.
FSA contributions are made with pre-tax dollars which means you get to keep more of your hard earned money!
You’ll want to use all your contributions for the year, as FSAs are a “use it or lose it” option. Some FSAs have a grace period (some as long as March 15th of the following year), and some allow you to carry over up to $500 a year, but not all. Be sure to find out what your plan does so you don’t lose your money.
Thousands of items are covered, why not buy them with pre-tax dollars?
Thousands of items are available for purchase with your FSA account. Here are a few items you can use those pre-tax dollars on:
- First Aid Kits
- Liquid Bandages
- And more
- Breast Pumps
- Nursing Pads
- Boogie Wipes
- Gas Relief
- And more
- Contact lens care
- Reading glasses
- And more
- LASIK eye surgery
- Chiropractic treatment
- And more
Using your account is easy
Using your FSA account is easy. Many plans offer debit cards, and others require you to fill out reimbursement forms.
Either way, using pre-tax dollars to help pay for healthcare each year makes a little paperwork worth it.
If you have the option to open an FSA through your employer, take a look, crunch some numbers and see if one makes sense for you. Using pre-tax dollars for items you need anyway makes lots of sense.
If you need more help with health account decisions, check out our blog. We will make you a healthcare benefits expert in no time, without any extra work or effort on your end.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.