It’s the most wonderful time of the year, and it’s also insurance open enrollment season at many companies.
There are so many decisions to make, and unless you know your way around insurance, it can be hard to know what choice to make.
But after being employed at a large insurance company for a couple of years, I can help advise you on one of those decisions.
One of things you’ll be asked to decide is whether you want to open a flexible spending account (FSA), and how much money you want to put in it.
Here is the quick 411 on FSAs:
- What are they?
An FSA is a special account you put money into that you use to pay for certain out-of-pocket health care costs. The total amount of money you decide to put in the account is divided by the number of paychecks you receive for the year, and that amount is held out of your paycheck and put into the account.
- Why should you open an FSA?
The biggest benefit is that you don’t pay taxes on this money. So essentially, you save your tax rate on medical expenses. For example, if your yearly tax rate is 20%, then you are saving 20% by paying your medical expenses out of this account.
- How do I know how much to put in an FSA?
The maximum for 2018 is $2,650 per FSA account. And, keep in mind many companies offer a rollover maximum (i.e you can rollover up to $500 of remaining money at the end of the year), or a 2.5 month grace period to let you spend remaining money through mid-March of the next year.
- What types of expenses are able to be paid using FSA money?
There are a ton of expenses you can pay with FSA money, but here are a few of the most common:
– Doctor/hospital co-pays and deductibles
– Dental services
– Chiropractic care
– Eye exams, glasses, contacts
– Lab fees
– Physical therapy
– Psychiatric therapy
You can also purchase a ton of over-the-counter products, even sunscreen or joint supporters, through the FSA Store site.
To put together a list of estimates for how much money you may need for each type of service, you can look at your benefits summary, past medical bills or call your doctors.
Store this list of estimates in your phone, planner to be able to refer to it all year.
- How do I spend money in the FSA account?
Typically, you are mailed an FSA card that works just like a credit card at any provider.
Admittedly, FSAs aren’t super exciting, but I’ll take any option I have for saving on medical expenses.
I have two other tips for saving on medical expenses:
- If your employer offers a telehealth benefit where you can talk to a doctor via phone or video conferencing and save yourself a trip to the doctor’s office for general health issues such allergies, pink eye or acid reflux. These tele-doctors can write you prescriptions just like a clinic-based doctor.
- Often you can save money by simply working with your doctor and asking questions. Are procedures they’re recommending really medically necessary? Can they refer you to a specialist in a freestanding clinic vs. a hospital-based clinic to save you often hundreds of dollars?
Do you have any other tips for saving on your family’s medical expenses? Feel free to share on the Defeating Busy Facebook page.