As the year ends and we frantically find all our co-pays for doctor’s offices, miscellaneous drug store receipts and bills from medical labs, it reminds us that putting aside money for these medical expenses was a good idea.
If you have the opportunity of being offered a Flexible spending Account by your employer its worth looking into as long as you reconcile before the year ends – you don’t want to lose the money you have set aside.
Flexible Spending Accounts are a way of setting aside pretax dollars in your account and using the money to pay for out-of pocket bills – these can include myriad items including braces for your kids, dentistry, prescription drugs, medical alert jewelry and many other items. Depending upon your needs you can even put in for acupuncture – but verify with your provider first.
When you next check out at Walgreens or Duane Reade look at your receipt. If there is an F beside an item – such a cough medicine – it means that the purchase on this item is eligible for your Flexible Spending Account – with most programs.
The accounts can save you hundreds of dollars, not just in federal taxes, but also in Social Security and, in some states, state income taxes. If you have kids and therefore run up some hefty bills, putting aside $1,500 could save you around $500 a year. The $1,500 is taken out of your paycheck (before taxes) over the year however you can apply your doctor visits, prescription drugs etc to the account and it will be deducted from your continuing contributions. But be sure to use up the money because it is a use it or lose it program. Most companies give you a few weeks in January (some even through March 15th) to find all those bills and fax them in to the provider.
However, if you find you have not used up all the money you elected to have set aside from your paycheck, you can always schedule an eye examination and purchase new eyeglasses – that’s more than likely to put you over your allotted contribution!