flexible health spending accounts - Page 2

[EmsMom]

Thanks, all. I only ran across the existence of this account by accident and I can't believe I have missed an opportunity like this! The administrative fee (City of NY) is actually $48 -- $4 a month. But the tax savings will be 25%. I wonder if there are other sources for these accounts? Maybe the fee would vary? Annoying, though, that it will be one more thing to keep on top of. Our finances are already so ^&* time-consuming. Now this will be one more thing to submit and keep track of. Anyway, I keep careful track of all of our expenses so I can budget the health account carefully. Now I just need to keep on top of my husband so he will actually set this up before the enrollment period ends in November. Wish me luck with that!!!

[mightymoo]

Originally Posted by EmsMom

Thanks, all. I only ran across the existence of this account by accident and I can't believe I have missed an opportunity like this! The administrative fee (City of NY) is actually $48 -- $4 a month. But the tax savings will be 25%. I wonder if there are other sources for these accounts? Maybe the fee would vary? Annoying, though, that it will be one more thing to keep on top of. Our finances are already so ^&* time-consuming. Now this will be one more thing to submit and keep track of. Anyway, I keep careful track of all of our expenses so I can budget the health account carefully. Now I just need to keep on top of my husband so he will actually set this up before the enrollment period ends in November. Wish me luck with that!!!

I think it depends on the company, if you get a debit card and they are actually pretty reasonable, it could be pretty easy. Mine makes us submit paperwork for even an FSA debit card at a doc's office. HELLO It's the freaking doctor's office! But, they take the insurance explaination of benefits as proof, so I just once in a while go in, look through my EOBs online and submit the claims.

[michelle524]

I don't have time to read the whole thread, but since this is what I do for a living (administer these plans) I thought I would chime in.

They are regulated by Section 125 of the IRS Code. Publication 502 will tell you what's reimbursable or deductible on your income tax. Use it or lose it is part of the regulations.

Most third party administrators will charge a fee for the plan. In the northeast where I am, it's usally $5 per month and $1.50 per month more if they give you a debit card. However, employers usually pay this for you since the tax savings they are getting offset the cost.

An employer is allowed to kick the charges back to you, but in my experience most do not.

I'd look at it like this: If you know your tax bracket, great, you can figure out how much you'll save. If you don't, I always tell people to figure about 25% of what they put in they'll save. If you put in $1000, you'll save about $250 - then you have to decide if that amount and the fee is all worth it.

Hope that helps. If you have other questions, feel free to PM me.

[Ellien C]

I was just going to say that I love mine and the regulations (use it or lose it) and what you can spend it on are made up by the govt. For us, we keep the money in the account all year long and then we submit one big reimbursement at the end of the year for everything. It pays for Christmas.
Walgreen's will give you a printout of all your prescriptions for the whole year, as will the doctor, eye doctor and child care. That cuts down on the time to do paperwork for every expense, but of course, you don't have the money until you do the paperwork.

[EmsMom]

I have just one more question. The $$ in the account is untaxed. I assume it is not earning any interest. Is this correct. Oh, this is two more questions, actually: Is the payment to the dr. that comes from the account still tax-deductible as normal (if we itemize that year and sometimes we do and sometimes we don't)? Thanks again, all.

[velochic]

Originally Posted by EmsMom

I have just one more question. The $$ in the account is untaxed. I assume it is not earning any interest. Is this correct. Oh, this is two more questions, actually: Is the payment to the dr. that comes from the account still tax-deductible as normal (if we itemize that year and sometimes we do and sometimes we don't)? Thanks again, all.

Yes, the money is tax-exempt and it does not earn any interest. The payment to the doctor is still applicable for the tax deduction concerning medical expenses. We've never been able to take the deduction (an it's just a portion of your expenses, not all) because your medical expenses have to be at least 7.5% of your AGI (adjusted gross income), but if your medical expenses are high enough to claim it, the medical savings won't affect it.

The fee makes sense now in light of how the service is being administered. You're not going to find any investment or savings that will out-earn the financial benefits of this, even with your fee. Good luck!

[mamamilkers]

Yeah, no fee for ours, either.

In addition I believe we have a 3-4 month grace period at the end of the year to use up the rest of it. We can always just buy things like Tylenol and whatnot to use it up, as well.