Flexible spending accounts(health insurance) Teach Me (funds, HSA, pay)

[MustangEater82]

So, I had heard of them but never really paid much attention. While going over some of my benefits I looked deeper into it.


So basically its an account where I can put pretaxed money in, to use towards medical expenses. Ok I figured that. Wife is having a baby this year and we only paid out about $800 total. So I wasn't too concerned about it.


But I started reading, eligible for daycare, Lasik surgery(something I might consider), glasses, eyewhere(stuff that is somewhat covered but not fully for me, I just dropped $400-600 for me and my wife)

The big one is daycare, for our current kid that is $600 a month for about 8-9 months a year. 2nd child is coming, I expect similar expenses.

Now I read, you can deduct child care from taxes, AND do a FSA(flexible spending account). Now I know its hard to say based on a million factor which is better. But traditionally is it better to do a FSA, pay out form there and not claim it on your taxes, or is it about the same and in the end it really washes out?


The calculator says $5k max which on childcare I will be able to do, and claims a ~$1700 savings, but don't know if that is inflated numbers to boost their program.

[Suncc49]

FSA's are great, but each year you put it in and use it or lose it!!!

I really prefer HSA's , health savings accounts that grow and function much like a 401k if you get a high enough balance.

The FSA - figure out what you will be spending each year, put it in, use all the $$. A great way of turning these into expenses into tax deductible items.

[eggalegga]

Don't have kids nor spouse. But used my flex spending account to pay for my LASIK 10 years ago. The cost was $3,000--so substantial savings for me to use my flex spending account.

I think the flex spending account really does help families or married couples with ongoing medical costs.

I've (luckily) never had enough medical expenses to claim on Schedule A. Isn't there some kind of AGI threshold/limit to claim medical on your Schedule A?

Do you have any co-workers who run their child care expenses through flex spending? You could ask their opinions as to why they chose that.

[oneasterisk]

Just be aware that in 2013, FSA contribution limits changes: How health care reform changes FSAs, HSAs

I've got a HSA with my HDHP and I really like how the balance rolls over.

[KristiD]

Originally Posted by Suncc49

FSA's are great, but each year you put it in and use it or lose it!!!

I really prefer HSA's , health savings accounts that grow and function much like a 401k if you get a high enough balance.

The FSA - figure out what you will be spending each year, put it in, use all the $$. A great way of turning these into expenses into tax deductible items.

The whole "use it or lose it" thing is the only downside I see to FSA's. As long as you do your research they can save you a ton of money. We try to estimate our annual expenses and put that amount plus a little extra in just in case. Anything that we don't spend near the end of the FSA period we spend on http://fsastore.com/. All of their items are FSA approved and they accept our FSA debit so we can spend all of the leftover funds in one spot, no extra hassle. It works out great for us!

[FW transplant]

Another good thing about FSAs is that you can spend the money before they deduct all of it. For example, $100 is deducted for each pay period throughout the year, but I can spend all the $2600 (26 pay periods) in January, is necessary. Well, at least my FSA does that.

[Zelva]

It is really good generally - just watch the use or lose (that's how they make their money!). Or, if a job change during year, etc. Just know those things.... because remember the savings is on the taxes, but the 'cost' can be dollar for dollar.

[golfgal]

You can NOT use your HSA funds for daycare. You can use funds for a dependent care FSA if your company allows that. The HSA is only for qualified medical expenses and as a family you can contribute up to $6450 in 2013 to that account (for those 55 and older you can add an additional $1000 catch up).

If you have an HSA you can't have a medical FSA. You can have a limited purpose FSA to use ONLY for dental and vision with a max contribution of $2500. You can also have a dependent care FSA to help pay for day care expenses for kids under 12. The dependent care FSA is nice if you have day care expenses but you can only use what is in the account at that time (same with the HSA).

You have to have a qualified medical plan in order to have an HSA though and that means you will have a deductible where you pay 100% of your medical cost up to that deductible the a co-insurance to an out of pocket max. Preventative care (well baby checks, physicals, etc.) are covered at 100%.

[Blinx]

It's great for routine expenses, especially if you can't itemize them on your taxes. The "credit card" they send you makes it really convenient. I went back through several years worth of medical expenses for routine exams, dentist, eye doctor, medications, added it all up and figured out what my regular monthly amount should be.

One thing -- just keep ALL of the receipts. Every once in a while they will audit you and ask you to send in a receipt for one or more expenses. I've had to go back to the dentist and ask them to re-print some of their bills to send in.

[Chorh888]

I read somewhere that the $2,500 limit for FSA applies to individuals. My wife and I both work and can set up two separate FSA with her employer and my employer. I have a big dental expense next year over $5,000. Can I use both her FSA credit card and my FSA credit card to pay for my health expense if we both set up FSA account at the maximum $2,500 limit? Does it matter that she is covered under my company health insurance plan? I believe the health insurance and FSA are two separate benefits and that FSA of one spouse can be used by the other spouse. Is that true?