How Medical Flexible Spending Account Can Help You

medical flexible spending accounts
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Need money to pay for medical deductibles and co-pays? Want to save money while paying for this too? Ask your Human Resource department at your work to see if they offer Flexible Spending Accounts (FSA). There are two separate FSA:  1) medical expenses and 2) dependent care. We are going to look at the one for medical expenses.

First of all, what exactly is a FSA?

  • Money is set up to use just on qualified health related expenses
  • Money that is payroll deducted from your pay check
  • Use it or lose it – VERY IMPORTANT!
  • Pretax – lowers your taxable earnings
  • IRS has a maximum amount that you are allowed to use per year
    • For 2017, the maximum was $2,600
    • Human Resources at your work will be able to tell you the amount each year
  • Full amount is available at the beginning of the year – while the amounts are taken out of your payroll check over the course of the year
  • Credit card -while different employers may do this piece differently, my employer issued a credit card with the funds loaded into it.

I love having a FSA! My son needed braces and they were put on in January. So we were able to use the money immediately to pay the orthodontist for what our dental insurance was not going to cover. It did not take us long that year to use all of the funds in the account and my paycheck just reflected the amounts taken out of my pay throughout the whole year, little by little.

When to do you set this up?

  • During yearly enrollment for benefits at work.
  • There may be other times if there are major life changes, so check with your Human Resources

How do you decide what to set up?

  • Check to see what an FSA eligible expense is. Below are a few examples, but check at for the full list in Publication 502 as well as who is eligible to use the FSA.
    • Medical, dental, and vision deductables and co payments.
    • Orthrodontics
    • Prescription medicines
  • In-eligible expenses include items like vitamins, whitening teeth, cosmetic surgery, fitness center dues, etc.
  • Estimate how much you anticipate having to spend on healthcare and remember that if you do not use all of the money on eligible expenses as determined by the IRS, that you lose this money. Consider how much you spend on prescription medicine for your family. While some medicines are just used occasionally, others may be used long term.

I get it that sometimes it’s just hard to know. For those years, I would put a lower amount. When my son needed braces, I knew that we would have no problem spending it all. Another year that it was easier to know what to put for us was when I was going through cancer treatments. Each year and individual will be different.

Checks and balances

  • Because this money was pretax, the company administering this program will ask you from time to time for a copy of the receipts. This is to be sure that it was spent in the correct year, for a qualifying individual, and for an eligible expense.
  • Each time you use the FSA card, make sure that you keep the receipt and backup detailing what the expense was for.
  • Keep a folder to put all receipts and the backup in.
  • When you get a letter requesting the receipts and backup, everything will be together. There is a timeframe to respond to these requests.
  • If you use the card and for some reason there is a refund, the refund has to be repaid to the employer or company administering the program. Check with Human Resources for more information.

So start examining your healthcare needs to determine if a medical FSA is right for you. If you know you will have medical expenses, this is a great way to take advantage of having the total amount of money you plan to payroll deduct right away and save some taxes.

Medical flexible spending accounts
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Medical Flexible Spending Account FSA

Need money to pay for medical bills? By using a medical flexible spending account this can help you.