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Return to Article: All About FSAs

• 11379
  

  Stop worrying about the amount you do not use in the FSA plan. Take you marginal federal tax rate (mine is 28%) plus your marginal state income tax rate (mine is 5.75%) and add them together. In my case say 1/3rd. Thus, one third of my income at the top level is taxed away. Therefore, I contribute my expected medical bills for the coming year (known) assume $1,200 times 4/3rds for total contributions of $1,600. If I only spend the $1,200 known I break even because the $400 that is lost is covered by what I do not pay in taxes. I save $400 on the bills I pay and giveup $400 for the year. However, I have another $400 for health expenses above the known amount without taking any risk. You may not like the flavor but the cookies keep you alive. However, if you do not complain about the flavor you will never get what you like.

  taxpayer Posted August 3, 2005 7:02 AM
• 11312
  

  The government could set out free cookies in the workplace and someone would complain about the flavor.

  GovExec.com reader Posted July 29, 2005 4:16 PM
• 11299
  

  "If you find as the year closes in that you may have a surplus, go to the dentist and have that chipped tooth fixed or get your teeth whitened."

  Cosmetic services are not eligible for tax-free reimbursement from a Health Care FSA.

  GovExec.com reader Posted July 29, 2005 7:16 AM
• 11288
  

  The key to not forfeiting money in an FSA is to ONLY contribute KNOWN medical/dental/vision expenses. If you don't have any KNOWN medical/dental/vision expenses, do not contribute. Most people KNOW if they will incur orthodontic expenses, purchase eyeglasses, have at least one or two physician co-payments and monthly prescription drug co-pays every year. If you don't have any KNOWN expenses, you are incredibly lucky. If you do, you get a huge tax break with federal, state and FICA tax. You should never contribute money to an FSA for "what if" expenses, such as what if you have a serious illness or accident.

  Most private sector employees have had the opportunity to contribute to FSAs since late 1970's and are comfortable with how the plan works and have saved thousands of dollars in taxes. The feds have only had the opportunity to pay for out of pocket medical expenses tax-free dollars since July of 2003... they too will get comfortable with FSAs.. until then they will continue to pay taxes on their known out of pocket medical expenses.

  GovExec.com reader Posted July 28, 2005 6:33 PM
• 11283
  

  While you can't predict to the penny your annual medical expense you could at minimum take an hour out of one day to estimate what you typically spend on a regular basis (barring the emergencies)in a year.

  Do you buy aspirin and Band-Aids? Do you ever have to get a Rx? Ever see a Doctor, a Dentist, any medical professional? All of the Co-payments are deductible along with OTC purchases. At best, you could safely put 500.00 into FSA and gain a deduction for that.

  If you find as the year closes in that you may have a surplus, go to the dentist and have that chipped tooth fixed or get your teeth whitened. Buy new glasses or something. Do not just let the money go to nothing!

  Be smart about what you put in the FSA and take the deduction benefit that is staring you in the face. I don't know about some of you but I like to keep as much of MY money to myself.

  Dave Posted July 28, 2005 1:54 PM
• 11276
  

  FSAs what a joke. This is a good idea that remains incomplete. It reminds me of the phone commercial on TV where the guy gives a ball to a child then says you can play with this if you tell me how much you're going to use it over the next 2 years!

  No one knows what type of medical expenses they will incurr in the future. We should not be penalized for not under spending in relation to one's health, but then again I guess I can always get married or divorced or adopt a child....or other ife changing event just to make a change to my FSA...now that makes sense to me. Perhaps one of the Senators who worked on this will decide to get divorced just to make changes to their FSA.

  GovExec.com reader Posted July 28, 2005 10:57 AM
• 11243
  

  In response to Flexible Spending Accounts: enabling you to avoid forfeiting unused funds. Forfeited funds are used to offset future administrative costs for running the program.

  When policy is changed to allow unused funds to roll over into the next year or to be paid back to the employee, at that time I will sign up. As the policy for Flexible Spending Accounts stands now, which allows for unused funds to be forfeited, it is not in my best interest to sign up for this plan.

  GovExec.com reader Posted July 28, 2005 6:29 AM