A flexible spending account, also sometimes referred to as a reimbursement account, is a type of account sponsored by an employer that will allow you to pay for some of your medical expenses. This money is taken from your income on a pre-tax basis, so it can be really advantageous to you financially. If you think that you might have a lot of medical expense that will not be covered by your regular health insurance policy, then you should consider taking part in your employer’s FSA plan.
A flexible spending account can actually save you a lot of money by reducing your income taxes. All of the contributions that you are going to make to your account are going to be taken before any taxes are assessed, so this portion of your income will not be reported to the IRS. The result of this is that you are going to be reducing your taxable income, yet you will still be able to spend this money on eligible health expenses. You could really end up saving yourself a lot of money this way.
Deciding on an Account
Before you choose a flexible spending account, you need to think about what it can do for you. If you just choose to sign up for this without really looking into how it will benefit you, you could end up wasting your money. Flexible spending accounts must be used during the year because the money in your account cannot be rolled over to the next year. If you don’t think that you will have much need to use these for health related expenses, then there is no need for you to sign up for one.
It’s a good idea for you to spend some time looking over your regular health insurance form to see what kinds of things it won’t cover. If you spend a little time trying to understand just what your policy will cover, then you can get an understanding of how a flexible savings account might benefit you. If your health plan does not come with coverage that will include things like dental and vision, then you could definitely benefit from getting a flexible spending account through your employer. These costs can really add up if you have to pay for them out of pocket, so you should consider getting an account.
You can also use a flexible spending account in order to help you pay for things like co-payments and prescription costs. When you have to go to the doctor quite a bit, these costs can really add up. If you are struck with an illness or have a chronic condition, then you can end up spending a lot of money on these kinds of costs. You don’t want to end up having to pay too much money for these types of costs out of your own pocket, then you should really get one of these accounts.
Understanding Reimbursement Options
When you are exploring flexible spending accounts, you should consider what your options for reimbursement are. Fortunately, a lot of different FSA providers are going to offer you instant reimbursement. That means that you can use your card in order to pay for expenses and you won’t ever have to pay money out of your own pocket. Check to see what your options for reimbursement are going to be before you decide to get one of these accounts through your employment. You don’t want to get stuck having to wait for checks in the mail, if you can help it.