FSAs and other health expense considerations

[rosarugosa]

Next week is open enrollment at work. While there have been no premium increases, our deductibles are increasing from $400 to $600 per person, and out of pocket maximums are increasing from $1500 to $2000. per person. We'll feel the full impact of the deductible increase for DH, although hopefully not the OOP next year, and I might not have much out of pocket for myself if I'm lucky. I need to determine how much to put in my FSA. I've always been perplexed as to why this least predictable tax deduction needs to be predicted with the use-it-or-lose-it provision. I don't itemize anymore, but when I did, I could have predicted my other deductible expenses (e.g. mortgage interest, property taxes) pretty accurately, but medical expenses are a toughie.
Does anyone know the rationale as to why the FSA rules are as they are? Do you use a FSA? I've always used one, but I've also always conservatively estimated my expenses, so never got the full advantage (nor have I ever forfeited anything).
rrrrr

[ApatheticNoMore]

Does anyone know the rationale as to why the FSA rules are as they are?

It's balancing risk for the employer. Here's how it works 1) you can use your FSA right away, lets say in the first month you use several thousand, then you quit/lose your job/whatever after that month. The employer NEVER actually collects the money you've spend on medical expenses, since you just used a whole year of FSA deductions in a month. 2) so what's in it for the employer, why should they go for this scheme? Because they get unclaimed FSA money at the end of the year, anything you allocate and don't spend. So I'm sure they do well, especially from people who over-allocate.


Do you use a FSA? I've always used one, but I've also always conservatively estimated my expenses, so never got the full advantage (nor have I ever forfeited anything).

I put in enough for my twice a year dental visit (just the check up, maybe ocassionally xrays, I don't anticipate fillings and pay those out of pocket), and maybe a copay or two for the doctor.

[Blackdog Lin]

I always had access to an FSA, but never signed up for it as (1) traditionally, we would have a year of huge expenses where it would have helped, then (2) the next year we'd have little-to-no medical expenses that would qualify, and I would have lost money.

It just never seemed SIMPLE to me, as you eloquently explained. I have seriously been trying to simplify my life these last years, and an FSA just never seemed worth the trouble, for our situation and stage of life.....

(but if I had child-care, or elder-care expenses, that could be predicted.....of course that would be a different situation. It just never worked for OUR household situation.)

[rosarugosa]

Actually, my employer used to divide up the forfeiture among all the plan participants, and once a year we would get a check for $35 - $50, so they were not keeping the money. However, employees were clamoring for a debit card system, so when that got implemented, the company used the forfeiture toward the expense of paying the vendor for the debit-card program. Prior to that, it was handled in-house and we would pay and then submit for reimbursement.

[iris lily]

Our dentist and eyeglass costs are predictable. Since DH's eyeglasses are around $700 each time, that's a chunk of change right there. If it is a year where I am getting glasses, then it's worth it. Well save a couple hundred bucks annually in have an FSA. (Is that the acronym, FSA? Seems like we us another term, Health Savings Plan or something like that.)

[heydude]

i work for a store that sells things that can be bought with FSA dollars. at the end of every year, people spend hundreds of unused FSA dollars on a whole bunch of stuff that they do not need. it is sic.

[heydude]

look at how much you actually save on taxes per hundred bucks. just pull up the tax code. if you are only saving 10 bucks for every 100 bucks, then really see if loosing a hundred bucks is worth the 10 you would save. not really!

[rosarugosa]

IL: We used to call them Reimbursement Accounts at my company, but Flexible Spending Account (FSA) seems to be the more widely used expression.
Dude: I've never had to do the end of the year spree thing, and I agree that is crazy. I've always been conservative in terms of what I put in the account and easily used it all on necessary expenses. This year I did $1300., but I could have done $2400.

[awakenedsoul]

I don't have one. That's a huge increase. Ouch!
I have catastrophic insurance with Blue Shield. I buy used reading glasses at the Salvation Army and do eye exercises that I learned in yoga. I use the Zellies system in place of dentistry. I exercise daily and do yoga for preventive care. It takes a lot of time and self discipline, but it works for me.

[rodeosweetheart]

Quick note to Iris--my husband has glasses like that, and we just used old prescriptions to buy him 3 pairs at zennis for 105 dollars. They are thick (we didn't want to pay extra for thin til we tried them) and he LOVES the glasses, absolutely thrilled with them. You just need your prescription an pupillary distance. We are not even using our insurance for the glasses, we have saved so much this way--one time our portion after insurance was 400 dollars.

When I used the FSA I put in just enough to cover my deductible, and it covered meds and such, and was spent right to the penny. Weird. I guessed low, though, since did not want to walk away from anything.

Only problem was every time I used it, it was a hassle--some providers didn't take the debit card, and you would use it and then get a nasty note about "proving" the expense or them reporting you to the IRS--I mean what the what?? For things like dental work and prescriptions, grr.