Flexible Spending Accounts – Use It or Lose It!!

November is the open enrollment season for “Flexible Spending Accounts” (FSA) and in light of this, I thought I would provide a few tips on how to best use your FSA.  Plus, I would like to encourage everyone fortunate enough to have one as part of their employee benefits to use it before you lose it this year!

A little bit about FSAs: Did you know that people who fall into a higher tax bracket and have higher health care costs are able to yield the highest savings? At this time, the maximum amount allotted for an FSA is between $3,000 and $5,000.  This amount is determined by the state in which you live and your employer.  In 2013, however, the maximum allotted will be reduced to $2,500.

Here’s a great example of how this could break down for you as a possible tax savings:

$50,000 Gross annual income

$4,400 Money towards FSA

$45,600 Taxable income

$1,437 Total tax savings (33%)

So exactly how much to put into your account requires a little forethought in order to maximize your savings – and remember – the biggest catch with an FSA is that if you don’t use up the money before the end of the year the money is lost. There are several tools to help you decide how much money to set aside.  For instance, there are FSA calculators such as this one from WageWorks: https://www.wageworks.com/employee/health-care/calculators/fsa.aspx .

Another tip for planning is to reflect on your previous year’s health expenses, but remember to think of additional costs you’d like to add in the new year, such as LASIK.  Also, visit your dentist, optometrist, and doctor prior to the date of enrollment to project upcoming procedures that may be needed in the next 12 months.

Finally, when it came to allowed expenses for FSAs, it became trickier to use your FSA this year, particularly because over-the-counter medications started requiring a doctor’s prescription for everything except insulin.  However, your FSA can still be used for common health care costs, including vision coverage, which means vision exams and eye glasses (even sunglasses!), contact lenses, solutions, cleaners and cases, laser eye surgery and vision co-pays, co-insurace and deductibles are covered .  For a complete list of items covered from A-Z, check out this resource from FSAFEDS (https://www.fsafeds.com/fsafeds/eligibleexpneses.asp).

And if you’re looking to squeeze in that last eye exam into 2011’s FSA, or even if you’d like to stop in and inquire about projected costs for vision care to help plan for 2012, schedule your appointment today.  We look forward to seeing you and answering any questions you may have!

Katie Phillips, OD

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