With holiday parties and other end-of-year festivities coming up, your employee benefits are probably the last thing on your mind. But did you realize that enrolling in a Flexible Spending Account (FSA) can actually save you some hard-earned cash? The money set aside is pretax, so it’s practically like lowering your co-pay and prescription costs.
Check with your HR department to see what their deadline is for enrollment in an FSA plan. Then follow these tips.
Estimate your medical and dental spending. Think about what expenses you might have in 2008. Next year I plan to splurge on Lasik eye surgery (yes, it’s covered!), so I’ll be setting aside the maximum amount that my employer allows. Other eligible expenses include prescriptions (even birth control), transportation to medical appointments, glasses and contact lenses, doctor co-pays, sleep aids, and many over-the-counter medications. You’ll need a note from your PCP to get reimbursed for certain expenses like massage therapy or sunscreen if you need them to treat a specific condition, but you can usually request a note online.
Find out how to get reimbursed. Some plans will give you a debit card preloaded with your allotted amount for the year, which eliminates the need to fill out paperwork and submit receipts. (Just don’t use the card for something nonmedical like a new pair of shoes or you could get penalized.) If you’re in a “paper plan,” the company will ask that you mail or fax your receipts to them so that they can cut you a check (or direct-deposit the money into your account). Generally, money will be deducted from every paycheck over the course of the year, but you don’t need to wait until the money has been deducted before you can use it. If you’re shelling out for something pricey like a new pair of glasses or contacts, it’s helpful to find out how quickly you get reimbursed so you won’t overdraw your checking account and get into a bind.
Use it or lose it. If you haven’t used the money in your FSA account by March 15 of the following year, you will lose it. I rarely have this problem because I underestimate how much I’ll spend on doctor visits or prescriptions, but if you still have money left, you could splurge on a new pair of glasses, stock up on OTC meds like Tylenol, or get a flu shot.