I am thinking about getting one for the coming 2009 year, but I am a bit apprehensive. I have never had one and our company doesn’t have a sit down Q&A meeting for benefits. I really think it is to my benefit, but I am not certain how I should go about calculating what it should be. I don’t really know how much I spend each year on supplies.
Do any of you have one? Do you like it? How do you determine how much it should be?
Help!
Flex spending plans are a very good thing. That money is put aside tax free to pay for designated expenses (medical, child care, etc.) There is one major drawback that you need to keep in mind with these plans, though. If you do not accurately estimate your expenses to be covered by the plan for the year, for example you think you will spend $2500 on medical expenses but end up only spending $2000, you lose the excess that you have contributed to the plan.
Another alternative you might want to consider would be a Health Savings Account. There are restrictions on being able to open these accounts, based on the type of health insurance you have, your agent would be able to tell you if your plan qualifies or not. These plans allow you to put aside money for health care expenses of virtually any kind, just like the flex spending plans, but the big advantage is that you do not lose the funds at the end of the year if you don’t use them. So, using the same figures I used above, instead of losing the $500 it would stay in the account and build. The next year if you put $2500 in again, you really have $3000 to spend. The carryover does not reduce the amount you can contribute. This can really build up over time. These plans have only been available a few years, but are becoming pretty popular.
I look at all my maintenance medications (that I fill each month) and multiply the copays by 12. This will give me the LEAST that should be in there. My plan gives me a debit card with the money on it and I can use it for all allowable expenses.
Now if you get to the end of that money do they allow you to add to it?
That health savings account sounds great! I will have to research that one.
Thanks for the advice!
I was on my mother’s FSA when I was in college and she’d make me send all my receipts to her so she could get reimbursed. It shouldn’t be too hard to figure out your meds, just take a look at your last bill, and multiply by how often you fill it (once a month, every 3 months, 2x a year, etc.). Same with drs. appts. Do 1 copay for your eye doctor, 2 copays for dentist (if that’s how often you go), 3 copays for your endo, etc. I don’t think you can add more money, but ask your HR dept. They should be able to tell you.
Leah,
Sign up, it’s a good thing.
With the plans I am familiar with you pick an amount at the beginning of the period and you can’t change it unitl the next period. This allows the administrator to put a price on the plan.
Also, most plans are ‘use it or lose it’ plans. If you don’t make a claim for all the funds available, which have been deducted from your paycheck, you lose the money forever. Therefore you are right to be cautious and ask questions about how to estimate.
I say it’s better to underestimate for the first year. If you have kept copies of reciepts you can add them up yourself. Your pharmacy can give you a printout of your expenses for the year. Explain what you want and they’ll understand. Your physician’s billing departments can also tell you what you spent in the past year in co-pays and the like. Don’t forget eyeglass and dental.
I have one, and I contribute the maximum amount allowable and do not expect to have any leftover! But the key piece of information you’ll need to determine what your employer’s specific rules are on the annual limit you may contribute to the plan in pre-tax dollars. Employers generally limit the annual amount each employee may contribute in order to reduce their financial risk of pre-funding (the employer fronts the amount of money you will contribute over the course of the year), and each employer may set different limits. Pre-funding risk occurs should the employee leave or be terminated and thus no longer pay in to the plan, that means the employer does not recapture their pre-funding from the employee’s payroll deduction, which is why they set these limits. But these amounts can range, mine is something like $2,500/year (I don’t think that amount is extraordinary, but some employers may give a higher limit like $5,000).
Having said this, its very, very easy to rack up expenses which qualify. Every co-payment amount is eligible for reimbursement, as are out-of-pocket expenses for things like glucose tablets to treat lows, prescription glasses, etc. I figured that my prescription co-pays for insulin, test strips and doctors visits (my endo, primary care doctor, ophthalmologist, dermatologist, dentist, plus you can include any other specialist YOU might visit such as a gynecologist, etc.) alone would come close to the total, and I could easily meet any leftovers with eligible out-of-pocket expenses, but you may want to consider this relative to your employer’s maximum contribution amount.
The benefit is that your contributions are made with pre-tax dollars, meaning that it reduces the amount of your income which is considered taxable is reduced (thus reducing your taxes), so it benefits you to use such a plan if you have it available. But ask what the maximum contribution amount for your employer is, and do some quick calculations on all of your co-pays based on number of doctors visits and prescription refills you are likely to do each year. I agree that you may wish to be conservative the first year and adjust going forward, but the benefits are very real and can save you on tax liability!
HSA contribution limits are:
Single $2900
MFJ $5800
Catch up contributions can be made if you or spouse are over 55. That is an extra $900 for 2008.
Many banks provide these accounts and many of them provide debit cards. These contributions are deductible from your income taxes, grow tax free, and as long as they are used for medical expenses are not taxable when withdrawn.
An excellent source for info on this is www.hsabank.com. Great explanation of requirements in a way that is very easy to understand.
You all are so awesome! Thank you for ALL of this information!
I am getting ready for a trip in December and I just found today from emailing our FSA provider about cases at Walgreens. Diabetic supplies are covered under the medical FSA plan however Walgreens has all the items in their store coded as either medical or not. It may be that one that was not ok’d medically would have a dual purpose to be used for other purposes other than holding diabetic items. To purchase them on-line, if they were not from a medically coded provider, your card would probably not work. In those cases, you would have to purchase this by a different means and send in a manual claim form to be reimbursed. The type of case that is purchased would have to be labeled for diabetic items only, not a dual purpose type of case or would not be eligible.
Also I found out today that you may use your FSA card at either www.DiabeticExpress.com or www.DiabeticCareServices.com.
Hope this helps also…
This is one of the many things I love about Tu Diabetes - helpful info from people who know.
Ditto to everything said above. I keep a special little pouch in my purse to put receipts in that qualify. And now, many stores, such as Target, put a little symbol next to the items that qualify.
Hi, I’ve done the flex spending the last two years. An easy way to see how much you spend in perscriptions is to go to your pharmacist and he/she can print out all your prescriptions and how much you paid out of pocket for them. You can do this at the doctor’s office and dentist too! They can print out the past year - which is great because you can turn around and use the print out sheet to send to Security Flex as proof (like a receipt). This should give you a general idea of what amount to choose. Any amount that is left over you can update your first-aid and over the counter medications. You do have to decide on an amount which cannot change until next year’s plan. You can use receipts for yourself and your entire family - It is a very good thing! I would suggest it!