Flexible Spending Account (FSA) Facts
Contact Lens King
Most of us know someone or have had a firsthand experience paying out of pocket for medical care.
This may have been to cover copay's or to purchase required medical devices like contact lenses. These out of pocket expenses have the tendency
to present themselves at the most inopportune times that can amount to large sums. One idea that can help reduce this burden is starting a Flexible
Spending Account, or FSA for short.
Flexible spending accounts are accounts where one can add pre-tax money into to use to pay for out-of-pocket
expenses at a later time in the future. There are strong benefits to setting up an FSA. The following are a set of facts that can help you understand
the benefits of a Flexible Spending Account:
- Taxes: Flexible Spending Accounts hold pre-tax money. This means that you get the maximum efficiency possible from the investment
that you make in your family's health care resources.
- Contribution Limitation: FSA's are limited to $2,600 per year per employer.
- FSA Uses: FSA's can be used to cover deductibles and co-payments. The account cannot be used to pay insurance premiums however.
The funds within these account can cover medications prescribed by a doctor regardless if they are over the counter or not. These funds can
also be used to cover medical devices such as crutches and contact lenses. Also the account is not limited to personal use, for instance a
person can use it to cover out of pocket costs for their spouse or dependants as well.
- FSA Limits: The FSA account operates on a calendar year basis. However an employer can offer two additional options. The first
option provides a grace period that allows you up to 2.5 additional months to use the money that you have accumulated in the account for a
specific calendar year. Alternatively the second allows the account holder to carry over up to $500 per year to use the following calendar year.
It is important to note however that any money left in the account at the end of the coverage period will be lost.
Although Flexible Spending Accounts can help people better plan for and offset unforeseen costs,
one can only truly leverage its benefits by understanding its various restrictions and time sensitive limitations. Remaining current on the
benefits of the FSA account can provide the advantages of a pre-tax tool that can be used for your family's health needs.
For a more comprehensive list of commonly excepted medical and dental expenses that FSA's cover click here.