Flex Health Accounts – Enrollment Season is Now

Monday, November 10th, 2008

For those of you (or your spouses) who have employers that offer health, dental and/or life insurance benefits, November & December are usually the “open enrollment” periods when you have to choose which benefits you would like to have for the following year.

For some, Flex Spending Accounts (aka FSAs) are also offered.  For those with children in daycare or after-school care, usually the FSA for Childcare is a no-brainer–you max it out and it gets used up in a few months.  But what about the Healthcare FSA?

Healthcare FSAs are used to pay for eligible medical expenses not covered by your health insurance.  Since these accounts are funded by you with your pre-tax dollars, you can essentially save anywhere from 10-33% on eligible out-of-pocket medical expenses, depending on your tax bracket.  Out-of-pocket items include things like co-pays for doctor visits and prescriptions, dental work, etc.

The downside is that FSAs have “use it or lose it” clauses–if you don’t use up your contributions during the year, the money is lost. So many people either avoid the FSA entirely or underfund them (missing out on tax benefits) or overfund them (and lose cash).

So how do you make FSAs work for you?  You can sit down with a pencil, paper and calculator to determine how many times you go to the doctor, need a prescription, etc. each year. If you like, contact me with your name & email address at kristin@turbo-mom.com and I will send you a free FSA worksheet that you can either print out and write in your info or simply type right on the form and it will calculate your totals for you!

Copyright 2008-2009 Kristin Delfau, author of Turbo-Mom's Guide to Saving Money Without Wasting Time a womens' personal finance book, and Aji Publishing.

Tags: FSA, health insurance, open enrollment
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