A flexible spending account or (FSA) is an employee benefit that many people don’t use or understand. But a FSA can really save you a lot of money, especially when you have kids. Here is what FSAs are all about and how you can take advantage of them.
The most common FSA is one related to health care expenses, and it generally works through your employer. You put some money into an account, and then that money can be used for health care expenses. The benefit to you is that this money is put into your account before taxes are taking out. So, for example, if the government takes out $25 for every $100 you make, you’ll save $25 for each $100 that you use in your FSA. Most people with an income of $50,000 and average medical expenses can save about $800 a year in taxes.
Access to your FSA money is usually available through the use of a debit card, which is usually called a Flexcard. When you go to pay for a medical related expense, you use your Flexcard to pay for the purchase. The Flexcard makes it easy to use the account, so you don’t have to worry about filling out forms whenever you need access to the money.
You can use your FSA money to pay for medical co-pays, dental visits, glasses or contacts, and hospital expenses of course. You can also use this money to pay for prescriptions and even over the counter medicine, such as Tylenol or Band-aids or pre-natal vitamins. The number of things you can actually buy with the FSA account is growing, and recently, some dandruff shampoos may qualify as well.
The downside to FSA accounts is that you will need to use all of the money you put into the account by a set date, usually a year’s time. There is also a grace period 2 and 1/2 months that may also apply in addition to the year. Because of the set date, you don’t want to put more money into the account than you can use, because any money in the account that is not used by the deadline will be forfeit.
Mary Ann Romans writes about everything related to saving money in the Frugal Blog, creating a home in the Home Blog, caring for little ones in the Baby Blog and now relationships in the Marriage Blog. You can read more of her articles by clicking here or subscribe to the blog using the subscription box on the right.
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