Open Enrollment Season – Check Your Spending
Posted on October 26, 2005 4 Comments
Many companies will open their flex spending enrollment during the next few weeks. I have never contributed to these types of accounts, but I will this year. Here’s some of my own advice from an article I wrote earlier in the year. Enjoy… then sign up!
(Now I’m off to 1-800-contacts, where I can use my insurance plan (VSP) to file a claim before year’s end. Toodles.)
Given that I’ll spend a few thousand dollars on health care this year (more than usual due
to the braces and oral surgery), I could have saved a couple hundred dollars by utilizing my office’s
flexible spending account for health and dental care..
Prior to this year’s health fiasco, I didn’t understand how these accounts
work, so I did a little investigating.
Health spending accounts benefit employees because money spent on
health care is income-tax free. While government does not place a limit
on the amount of money you can set aside for health care, individual
employers sometimes do, often setting limits near the $2,000-$3,000 range (www.bls.gov/opub/cwc/cm20031022ar01p1.htm). Drawbacks do
exist to these accounts – if you overestimate your yearly health care
spending, you loose the extra money.
Though I haven’t put aside money for my health spending account yet,
I’m currently totaling up my costs for next year. Here are some tips
based on my strategy:
- Anticipate large costs: If you can put off an expensive
procedure until next year (when you can put in dollars against your account)
such as lasic eye surgery, wisdom teeth extraction or braces, plan to
do so. Then, discuss costs with your health care provider. Next year,
for instance, I’ll put $1,536 away to cover my monthly orthodontics payments.
- Check last year’s office visits: Count costs for annual visits to your
eye doctor, dentist, dermatologist, gynecologist, etc. I plan to also factor
in two doctor’s visits for colds. Add these to your running total.
- Include health care purchases: A quick look at your debit card or
checkbook will remind you of monthly prescription costs (heartburn medicine?
birth control?). Don’t forget about contacts and/or glasses (yes, you can use
1-800-Contacts under most plans).
This should give you a good idea of how much to store away in your
spending account. Of course, you can’t anticipate medical emergencies.
But based on your health history and purchase behavior, you can get a good
estimate for your account without going over.
And many Americans do go over. In fact, according to USA Today, $210 million
in unspent money is forfeited each year to health spending accounts (about
7 million Americans use these accounts). Upon closer look at the figures, given
that the average employee puts in $1,000 per year and leaves three percent
on the table, I estimate most people forfeit about $30 each year.
If, at year’s end, you’re stuck with money left in the account, fear not! Sandra
Block at USA Today offers helpful tips for draining your health spending account:
http://www.usatoday.com/money/perfi/columnist/block/2004-12-20-ym_x.htm
Some of my favorite ideas here are to restock your medicine cabinet
(check dates and toss out old medicines), buy new contacts (even if it’s only
one box!) and bump up payments on installment plans (like orthodontia).
If you don’t like the idea of flexible spending accounts, other options exist,
like health savings accounts (HSAs) and reimbursable medical accounts.
You can find plenty of information about both on the Internet.
Category: Money
Tags: benefits , health
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4 Responses to “Open Enrollment Season – Check Your Spending”
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October 27th, 2005 @ 12:33 am
One more neat fact about FSA’s…most plans allow you to get reimbursement as you incur medical expenses even if you don’t have the full amount in your account yet (such as early in the year). As long as the expense doesn’t exceed the total you will put in for the year, you get your money now. Check with your Benefits Coordinator in HR to see if your plan has this feature.
December 28th, 2007 @ 6:56 pm
There is simply no excuse for leaving that FSA money on the table, aside from forgetting – which isn’t really an excuse! If you don’t need it for health insurance co-pays, then do as this post recommends and allow the FSA to fund your lead into the new year with a surplus of contacts (or solution, or some other approved item that you use a lot). Thanks for the sound advice!
Jerry
http://www.leads4insurance.com
October 22nd, 2008 @ 1:43 am
Another nice thing about FSAs is that you may be able to file claims for each year as late as March (be sure to check with your HR coordinator). In addition, a little known fact is that if you put aside FSA money for the year, and then leave the company (planned or unplanned with notice), whatever FSA money you have spent and filed a claim for is yours even if your payroll deductions hadn’t caught up yet (be sure to check with your HR coordinator on this one). I found out about that at a previous job and asked for clarification because I wasn’t sure I’d heard right. I’m not suggesting you abuse the privilege, but it is good to know you won’t be penalized, and may inadvertently be rewarded for being organized (filing your claims as you go).
October 22nd, 2008 @ 1:45 am
Note: if anyone has any helpful information about HRAs out there, I’d love to hear it. I have trouble (and my doctors and doctor’s receptionists seem to as well) with deciphering my plan. I have a high deductible Aetna plan that switches between deductible and HRA, but the HRA contributions are often unclear. I supplement this with a regular FSA, which works well, but I want to make sure I’m making the most of my health plan. Any advice or referalls to helpful sites is welcome. Thanks.