to me what a "flex spending account" is when it comes to health insurance. i am absolutely clueless.

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“Don't get too comfortable with who you are at any given time - you may miss the opportunity to become who you want to be.”

Well, I assume its the same across the board... We use a FSA, and basically it's money that comes out of your check every week and is put in an account for you to use for co-pays, prescriptions, OTC medicine, you can use it towards your deductibles, glasses, contacts, etc. pretty much anything health related that insurance doesn't cover. With our plan, we have a website to go to that gives us what eligible and ineligible items are. The only downfall we've had is that the first year we participated they hardly ever asked for reciepts. This year, we have had to turn in a receipt for every little thing! Although they just sent us a letter saying they are going to ease up on repeat prescriptions, so we won't have to turn in receipts every month for my birth control or DH's allergy meds. Hope that helps!

Amy

One thing to add about the "Flexible spending accounts" that most don't know.... if you don't use it all by the end of the year.... you lose it! At least that's how most plans work, they don't always come out and explain that part of the plan to you.

You want it :D

It is a "Before tax" withdrawl from your check - meaning less of your check is subject to income tax, and the money in the account is not subject to income tax. I had an FSA card - it was like a debit card, and I just used that at the doctors etc. You have to figure how much you will spend in a year - total your estimated number of doc visit copays, deductible, and any extras like prescriptions, glasses, dental etc. Divide that total over your number of paychecks and have that amount held. You can ONLY use flex acct. money toward stuff they allow - deductible, copays, etc. At the end of the year, what you don't use IS LOST. You don't get it refunded, so it's better to be a little short than a little over.

It's helpful, because like having a percentage of your pay put in a 401k or a separate savings account, you learn to not "see" that money as income, but it makes it almost "extra" money, just for those pesky doctors appointments or big copay that can sometimes come up and bite you.

If you are a perfectly healthy family, and you never get sick, never see a doc or get prescriptions, then it might not be for you. If you run your deductible out in the first two weeks of the year - it's a lifesaver - you can use the whole year "contribution" before you've "contributed" (ours did at least).

HTH!

One other thing about flexible spending accounts is that if you elect to put $1200 in it (so $120 a month). Let's say you have $500 in eligible deductables in Jan (you have only put $120) you can still get the $500. Also, if you leave your job in let's say July (so you have put in $840), if you have spent $1200 in eligible deductables before your last day of employment then you can get the full $1200.

does a the company match what you put into it? kinda like a 401k , except for medical things? and if you are contributing to it, why do you "lose it if you don't use it". isn't that like paying for medical treatment that you'll never receive? that part is confusing?!?

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“Don't get too comfortable with who you are at any given time - you may miss the opportunity to become who you want to be.”

The company doesn't match it. There is no interest rate or rate of return - your benefit is that that it is NOT taxed money, and it's taken out pre tax. You "lose it or use it" because otherwise folks would dump as much money in as possible to avoid income tax. You are saving that 20% or so of income taxes - a much better return that putting it in a savings account after having 20% removed and then getting only about 2 or 3% interest.

Let's see if I can make "simple math".

You don't have a FSA. You make $1000 a month gross. After taxes (20%) you bring home $800. Uncle Sam gets $200. You have to pay a $300 doctor bill. You pay it, so now your income is $500.

You have an FSA. You have $1000 gross, but have $100 per month taken out for the FSA. The remaining $900 gets taxed - Uncle Sam gets $180. You take home $720. That same $300 bill comes, but you pay it out of the FSA (because for $100 a month, you have $1200 accessable). Your monthly income is still $720.

Make it "big" over the year. Lets say you end up with a year total of $1500 in med bills, prescriptions.

Plan 1:
Income: $12,000
Tax: $2400
Amount in FSA:$0
Medical Bills:$1500
Total in your pocket:$8100

Plan 2:
Income:$12,000
Tax: $2160
Amount in FSA:$1200
Medical bills:$1500
Total in your pocket: $8340

Having a FSA "saved" you $240.

We use it just for our contacts and glasses - it is an easy way to spend it for us, but we also don't put a huge amount into it. We get a debit card to use for perscriptions.

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Mom to Kaylee (10/2006)
Waiting on our second bundle of joy to arrive January 2009!

Everyone has talked about the "medical" flex, but there is also a "dependent care" flex spending. In Illinois (I would assume it's the same for everyone) you can allot up to $5000 in medical for flex spending and $5000 in dependent care. Both save us so much $$$$. The way to think of it is for every $$$$ you allot, you get $.30 free because Uncle Sam isn't getting any of it. We always run out before the next fiscal year in medical. Dependent care saves us a bundle also. It's $100 a week for daycare, but by using flex spending, $30 of that Uncle Sam doesn't get and I get it back. Medical you can get to BEFORE the full amount is in your account to pull from, but dependent care, you can only get reimbursed for the amount that has already been taken out of your check and put into your account.

Dependent care is kinda hard because it's coming out of your check into flex, AND you have to pay your daycare for services, so like a doubly whammy....but, it's only bad the first couple weeks until you get the first remibursement check, adn then I use that to pay for the next 2 weeks, and so forth. No debit card for dependent care.

Also, something that you need to know, by using flex spending, you are lowering your taxable income, which is good. BUT, by doing this, it effects your social security compensation.............DH has it set up through his work, and when I get a new job and am working for the state of IL also, then we will switch it to it coming out of my check instead of his since I make so much more than him.

All in all..........medical flex spending and dependent care flex spending are good to have.