The Pulse of SchoolCare, March 2023

How Does Electing a Flexible Spending Account Save Me Money?

News-Main-Is-FSA-for-MePublished March 9, 2023

Open enrollment begins next month. If your employer offers an FSA and you’ve never signed up for one, you may ask yourself is an FSA worth it? An FSA is a great way to save money on eligible medical, dental, vision and hearing expenses as well as over the counter medications not covered by the medical plan using pre-tax dollars. If your employer offers an FSA, here are some benefits to consider:

  • Save money on things you are already planning to purchase. With an FSA you can save approximately $27 in taxes for every $100 you set aside. This will increase your spendable income and help you pay for health care expenses for such as copays, coinsurance, deductibles, eyewear and more for you, your spouse and dependents! Click here for a complete list of eligible expenses.
  • Access all your funds immediately. Your full FSA contribution amount will be accessible on the first day of the plan year.
  • Use your FSA on eligible over-the-counter items. This means you can use FSA dollars towards all essential items you purchase to care for you and your family such as allergy medicine, first-aid, feminine care, pain relievers, thermometers and more. Click here to shop OTC products at the FSA Store.

Maximize your benefit

Maximizing your FSA benefit to save money is all about appropriately budgeting for the year ahead. For example, say you have the following expenses:

  1. A $20 monthly prescription ($240/yr.)
  2. $260 glasses
  3. $500 deductible for an upcoming non-emergency procedure

That comes to $1,000 in out-of-pocket costs. By electing $1,000 to your FSA, the total will be deducted through payroll over the entire plan year, and you can access it on the first day of the plan year. In addition, you will have an extra $270 in your pocket from pre-tax savings.

Use this Election Worksheet to help you make a conservative election this plan year.

Use it before the year ends

It’s important to set aside only what you expect to spend in a year. Your FSA benefit does not roll over from year-to-year, so be conservative with your election. Some plans allow up to a $500 roll over of funds or a two-and-a-half-month grace period. Make sure to know what the rules are for your plan so you don’t lose out on money at the end of the year.

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