FSA Accounts and how much?

[Deleted]

We just figured that it might be a smart move for us to open a FSA account... learned that the hard way after spending over 1k in dentist bills for the both us (all 4 wisdom teeth removal for my wife; removing a dead tooth for me and replacing it with a fake that looks real kinda cool).

I spoke with HR and it seems it's too late and we would need to wait till next round of open enrollment which is ok with us. She did warn me that while it is a good tool, the downside side is : Use it or lose it.

So how do you decide how much to put aside in a FSA and how to avoid losing your money?

edited: my bad, I meant FSA. Sorry

[schildi]

Mar 16, 2011 13:56:56 GMT -5 TheHaitian said:

We just figured that it might be a smart move for us to open a HSA account... learned that the hard way after spending over 1k in dentist bills for the both us (all 4 wisdom teeth removal for my wife; removing a dead tooth for me and replacing it with a fake that looks real kinda cool).

I spoke with HR and it seems it's too late and we would need to wait till next round of open enrollment which is ok with us. She did warn me that while it is a good tool, the downside side is : Use it or lose it.

So how do you decide how much to put aside in a HSA and how to avoid losing your money?

cawiau, I think you have a misunderstanding here. An HSA is not use it or lose it, it rolls over year after year, the entire balance. For an HSA, you need to be in a high deductible health plan (HDHP). And, you could open an HSA right now, at any time, on your own if you fulfill the requirements (like having an HDHP).

Are you talking about an FSA?

[illinicheme]

An FSA is use it or lose it. A HSA is a savings account associated with high-deductible health insurance coverage.

ETA: Assuming you're talking about an FSA, I have a decent idea what our baseline out-of-pocket reimbursable medical costs will be each year (prescription co-pays, contact lenses, etc). I usually put in $300-500 per year. I don't try to plan for FSA coverage of unforeseen events, like breaking a tooth. (Sometimes you will have an idea that something like wisdom teeth removal is coming up in the next year and can account for it.)

[souldoubt]

I go to a chiropractor regularly so I know what my monthly expense will be. I put enough away into my FSA account to cover the cost of visits for a year. It used to be a bit easier to use it rather than lose it when individuals could by OTC medicine and get reimbursed. The rules changed starting this last year so that there are more restrictions on what you can get reimbursed for. Knock on wood but I don't normally go to the doctor much so I don't budget for anything beyond that. If I wasn't going to the chiro I would still do maybe $100 a year in anticipation of doctors visits.

[Deleted]

The use it or lose it aspect makes me think it is an FSA, not an HSA. In that case, we estimate what we know we will need in a year and add a slight buffer. Although now that you can no longer purchase over the counter drugs without a prescription we will most likely reduce our contribution.

We have been contributing $1500 for the last couple of years and we have not left any money unused.

[NomoreDramaQ1015]

We get an HRA thru my workplace, which is different from an HSA, but same in that it is "use it or lose it".

I used it for my pre-natal and labor expenses. I have a yearly OOP cap of $2k on my insurance and then it pays everything 100% for the remainder of the year. So I put in $2k because even in a catostropic event I'd still only have to pay $2k.

I'd average out what you spend in a year on out of pocket medical/dental expenses and put that in per month.

[bean29]

I too was going to say you were confusing an FSA and an HSA.

There are benefits to both. The HSA you must be in a high deductible health insurance plan to have an HSA but you can change your annual contribution mid year if you feel your original estimate was wrong. With the HSA you only have access to as much $$ as has been deposited to your account.

The FSA is use it or lose it. But if you were contributing $$20/wk $1040/yr and got to then end of Jan and needed the whole $1040 to pay for dental work, you can get the $$ before it has been withheld from your paycheck.

In the past it was explained to me that you should not obsess about estimating your contribution to a FSA exactly - the tax effect offsetts if you overestimate your needs. Say you estimated you would need $1040 to cover your medical expenses. If you only needed $1000 you lose the $40, however you saved and Fed, State and FICA so your upaid taxes offset the $40.00.

[schildi]

Mar 16, 2011 14:03:08 GMT -5 NomoreDramaQ1015 said:

We get an HRA thru my workplace, which is different from an HSA, but same in that it is "use it or lose it".

Drama, an HSA is not use it or lose it.

[schildi]

I like our HSA, and the fact that now we get all dental work done with before tax money. I fund it to the allowed max since three years now, we have accumulated about $10K. It's a nice additional retirement savings if we don't need all of it by then for medical expenses, which is unlikely for as long as our annual out of pocket max is lower than the annual contribution limit for the HSA (as it is at the moment).

[Deleted]

Sorry everyone, I meant FSA.

So how much for a married couple with no kids? Like $250-500?

We have MVP for health insurance and Delta Dental for Dental insurance.

MVP has a co-pay of:
$25 for PCP
$30 for Specialist
$30 for Urgent Care
$500 for Hospital Inpatient
$150 for Emergency Room


Delta Dental has no co-pay but we have learned the past year that there is a lot they don't cover or cover fully (like my wife going under for her wisdom tooth removal) but that is the only option my job offers. We are looking at my wife's job dental plan now to see if it might be worth to switch.

[The Walk of the Penguin Mich]

I would never guess what someone else uses, cawiau. This is something that you are going to have to determine for yourself, looking over your past year's REGULAR medical expenses. Do not try to anticipate emergencies because you cannot.

Last year, I put $1000 into my FSA it turns out, I woefully underfunded it. However, I based my contributions on my regular prescriptions, the cost of my copays and needing new glasses this year. Halfway into my year I discovered that I needed my hip replaced......NOW (I went from the gym to crutches and narcotics in 24 hours). So I am going to have expenses waaaaay above what I should have flexed for this year.

Since you can no longer use OTC meds for your FSA, look at your copays each year, your prescriptions, glasses/contacts and go from there. Unless you have a procedure that you need to have done and can plan, you want to underestimate your contributions.

[schildi]

I agree with Mich1. This is something very specific to your family, and has little to do with age and marriage status. As Mich said, look back at last years regular expenses. Sometimes you can also add an amount for something anticipated, like you know you will get a bridge or crown done in the next year.
Yeah, I'd not try to predict emergencies. The decision is much easier with an HSA, as the money rolls over. I just max it.

[Chocolate Lover]

I love my FSA, and I add up the co pays for any prescription meds for the year, estimate 2 or 3 doctor visits per person (I have 3 kids) and a guesstimate of how much an average cold/allergy season will be in prescriptions. (with one kid it's just about guarenteed we'll need it). Like mich said, don't try to see the future emergencies, you don't get it back.

[Chocolate Lover]

This message has been deleted. Sorry, double post

[Tiny]

You'll just need to keep track of the expenses that you normally incurr during the year and then use that amount for your FSA. You shouldn't attempt to plan for 'unexpected' expenses that's a sure fire way to 'lose' money in your FSA.

Last year I put 1200 into my FSA to cover dental checkups (no dental insurance), copays - dr visit and perscriptions, and two pairs of new glasses.
This year I put $500 into my FSA to cover my routine dental exams and dr office/perscription copays.
Unfortunately, I just had my 6 month visit to my dentist and one tooth has been giving me trouble - a 30 year old filling has failed and since it's on the corner of tooth the dentist recommended a crown. Another 30 year old filling has been on the watch and wait list - so I think it's gonna go too. Total cost about 1K. There's no way I could have predicted this expense and I can't tough it out until Next Year so I'll use up my FSA on the crown and pay for other stuff out of pocket.
I'm not upset about not having put enough into the FSA to cover this totally unforseen expense. I'll happily take and use $500 tax free dollars. It's better than 'loosing' money if I don't use it up.

[pepper112765]

Mar 16, 2011 15:00:51 GMT -5 TheHaitian said:

Sorry everyone, I meant FSA.

So how much for a married couple with no kids? Like $250-500?

We have MVP for health insurance and Delta Dental for Dental insurance.

MVP has a co-pay of:
$25 for PCP
$30 for Specialist
$30 for Urgent Care
$500 for Hospital Inpatient
$150 for Emergency Room


Delta Dental has no co-pay but we have learned the past year that there is a lot they don't cover or cover fully (like my wife going under for her wisdom tooth removal) but that is the only option my job offers. We are looking at my wife's job dental plan now to see if it might be worth to switch.

That's weird, when my daughter had her wisdom teeth removed, we used a combination of health and dental insurance. I have an FSA, I contribute 3000 per year and my employer contributes 1400, I have a 1000/2000 deductible on the health insurance. I'm a few hundred shy of the family deductible, son had emergency appendectomy, those bills have been rolling in over the last week or so. I also use the HSA for dental not covered, which isn't much -- I have Metlife; my whole family wears prescription glasses and with children, they sometimes go through three-four pair a year, so I also use it for that. The pediatric ophthamologist I use doesn't take any insurance at all, and those office visits are about $135.00. I use every penny and then some.

[pepper112765]

I meant FSA...

[pepper112765]

Mar 16, 2011 15:13:34 GMT -5 The Walk of the Penguin Mich said:

I would never guess what someone else uses, cawiau. This is something that you are going to have to determine for yourself, looking over your past year's REGULAR medical expenses. Do not try to anticipate emergencies because you cannot.

Last year, I put $1000 into my FSA it turns out, I woefully underfunded it. However, I based my contributions on my regular prescriptions, the cost of my copays and needing new glasses this year. Halfway into my year I discovered that I needed my hip replaced......NOW (I went from the gym to crutches and narcotics in 24 hours). So I am going to have expenses waaaaay above what I should have flexed for this year.

Since you can no longer use OTC meds for your FSA, look at your copays each year, your prescriptions, glasses/contacts and go from there. Unless you have a procedure that you need to have done and can plan, you want to underestimate your contributions.

You can be reimbursed for OTC meds through the FSA as long as you have a prescription for it. For my youngest daughter, her gastroenterologist wasn't very happy about using his prescription pad for OTC meds, but I definitely asked him for it, since she has to take these meds for a prolonged period of time.

[msgumby]

If you itemize deductions (instead of using a standard deduction) does that mean you would get roughly the same benefit of an FSA, but without the "lose it or use it?" This is our first year to have itemized deductions along with potentially significant health costs, and I'm not sure if it's better to open an FSA or not (I don't like the idea of losing it at the end if I overestimate our expenses). We have very little routine medical expenses and would just need it for major things (prenatal care and childbirth costs).

[schildi]

Mar 16, 2011 17:17:12 GMT -5 msgumby said:

If you itemize deductions (instead of using a standard deduction) does that mean you would get roughly the same benefit of an FSA, but without the "lose it or use it?" This is our first year to have itemized deductions along with potentially significant health costs, and I'm not sure if it's better to open an FSA or not (I don't like the idea of losing it at the end if I overestimate our expenses). We have very little routine medical expenses and would just need it for major things (prenatal care and childbirth costs).

I believe on your tax return you can only deduct medical expenses that exceed 7.5% of you AGI, or something like that. Don't quote me on that, though ...

[Deleted]

Cawiau, do you or your wife wear contacts or glasses? We estimate what we need for the year, knowing that one of us could always get a new pair of glasses if there was extra money. It's not like either of us get a new pair every year or even every other year so it's not waste.

But like others have said, it is very individual. We put in about $1800 and run out in the summer. I'm on a different schedule than you guys; my flex account runs Oct.1 - Sept. 30.

[wvugurl26]

At my job $250 is the minimum you can put in for a year. I started my job later in 2010 so did $25 a check to get the minimum. I ended up buying contacts at the end of the year. I seem to go through them. I think I have 1.5 boxes left out of 4 I bought in early December.

I kept it at $25/every 2 weeks thinking I would get glasses. It was at least $200 last time I got them and that was a few years back. March is not over and I have spent at least half of what will go into the account this year.

Now granted I had some health issues pop up and I've been to doctors 4 times already this year outside of normally scheduled stuff. Considering it looks like my prescription costs going forward will be $50/month I underestimated. I have another appt tomorrow and 2 more in April. These are all for specialists so $35 per appointment.

For next year, I don't think I'll try to increase it to cover every little thing but I've learned for me that $25/2 weeks isn't enough. I'm thinking $1000 wouldn't be unreasonable for me. The $650 or whatever I'll end up with this year isn't going to be nearly enough. While I hope to get some better, I don't think all the issues I'm having now will leave so long as I remain in this area.

Since you can't sign up now, track your medical spending for the rest of the year. See what's normal and what's not likely to happen again.

[Deleted]

Thanks everyone...

We don't wear glasses or have contacts and so far our dentist bills has been the only major expense medically.

We are as healthy as we can be for our age, and besides the regular doctor visits nothing really out of the ordinary.

[telephus44]

I always add up the costs of DH's prescriptions, throw in another $100 or so for Dr visits, and I still always run out after 3-4 months. This year and last DS was admitted to the ER (and last year to the ICU) for an acute asthma attack, both burned through a lot of money really quickly.

However, we are currently TTC, so next year I will be putting in a lot more. Our plan year runs Oct to Sept.

[Angel!]

Mar 16, 2011 17:17:12 GMT -5 msgumby said:

If you itemize deductions (instead of using a standard deduction) does that mean you would get roughly the same benefit of an FSA, but without the "lose it or use it?" This is our first year to have itemized deductions along with potentially significant health costs, and I'm not sure if it's better to open an FSA or not (I don't like the idea of losing it at the end if I overestimate our expenses). We have very little routine medical expenses and would just need it for major things (prenatal care and childbirth costs).

If you can accurately forecast your medical costs, then an FSA is a much better alternative. With itemizing, you can only itemize the medical expense that are above 7.5% of your AGI. Plus you don't pay SS or medicare taxes on FSA.

[Angel!]

Mar 16, 2011 22:48:10 GMT -5 TheHaitian said:

Thanks everyone...

We don't wear glasses or have contacts and so far our dentist bills has been the only major expense medically.

We are as healthy as we can be for our age, and besides the regular doctor visits nothing really out of the ordinary.

Honestly, I would just skip the FSA completely then. You have no regular expense to plan for, so there would be a decent chance you wouldn't use the money put in.

They are more useful for people that have fairly regular medical expenses like glasses or prescriptions or frequent doctor visits.

[NomoreDramaQ1015]

We don't wear glasses or have contacts and so far our dentist bills has been the only major expense medically.

We are as healthy as we can be for our age, and besides the regular doctor visits nothing really out of the ordinary.

I wouldn't worry about one then. I considered keeping it up but DH and I only go for physicals most of the time which are 100% free. So are DD's for now till the age of 5.

I decided I'll just save the money post tax should something big like needing a deep clean again come up as opposed to trying to figure out how to use up my HRA before I lose the money.

It was very handy for my pregnancy when I knew I would be meeting my deducitble and OOP maximum, but other than that I'd have a hard time finding things to spend the money on to make it worth yearly contributions.

[pepper112765]

Mar 17, 2011 14:38:45 GMT -5 Angel! said:

Mar 16, 2011 17:17:12 GMT -5 msgumby said:

If you itemize deductions (instead of using a standard deduction) does that mean you would get roughly the same benefit of an FSA, but without the "lose it or use it?" This is our first year to have itemized deductions along with potentially significant health costs, and I'm not sure if it's better to open an FSA or not (I don't like the idea of losing it at the end if I overestimate our expenses). We have very little routine medical expenses and would just need it for major things (prenatal care and childbirth costs).

If you can accurately forecast your medical costs, then an FSA is a much better alternative. With itemizing, you can only itemize the medical expense that are above 7.5% of your AGI. Plus you don't pay SS or medicare taxes on FSA.

And you cannot itemize the medical expenses paid by the FSA, since it is taken out pre-tax. However, a plus is that the total amount of your annual FSA election is available immediately to use, even though the funds haven't accrued.

[Deleted]

Thanks everyone, so when does it become worth it since besides our regular doctor visits that require co-pay and a few dentists bills we really don't have any other planned medical expenses.

Does it cover her birth controls? That is a regular expense

[Deleted]

Yes, it covers birth control. It also covers condoms, one of the few OTC items still covered.