Anyone here use a flex spending account?

[Wyndru]

Not sure what "lowest withholding" means, since your example showed $500 being withheld. When you determine how much you want to put in your FSA each paycheck, take 25% of that number (which is your tax savings) and tell the payroll guy you want your withholding reduced by that amount.

Those were just random numbers to show that my taxes were the same before and after flex. I think I use 1 for withholding allowance, it works out so I either owe a little or get nothing back at tax time.

 

[Fritzo]

Lot of strange ideas as to what HSA flex accounts are.

These accounts are actually pretty useful. They have to be paired with a High Deductible Health Insurance plan. The idea is your health care comes out of your pocket for the first $2500 or so (this varies). If it goes above that, you're 100% covered. The money before your deductible comes out of your Health Savings Account.

Health Savings accounts are kind of set up like free checking accounts at your bank. You have the freedom to use any bank you wish for your account (although your employer usually sets up a bank by default, you can change it any time). You put money in your savings account- usually pre-taxes- and it's usually deducted directly from your paycheck. If you have it deducted post-taxes, you have to organize your spending receipts and you get deductions when you file your taxes, which is a pain. Pre-tax is much better.

The account itself usually gives your a Mastercard of Visa debit card. When you have a medial expense, you can either charge it to your card, or write a check. If you don't have enough to pay for a bill, most doctors allow you to make payments out of the HSA account (say, $50 per pay).

These accounts are actually pretty nice if you're healthy. The money stays in the account, and if you accumulate over $2000, many banks will put the money in a market fund that gains high interest. You can even withdraw remaining funds when you retire tax free.

If you have medical problems or use expensive prescriptions, you may want to consider traditional insurance with prescription coverage. Otherwise you'll be forking out a lot of up-front cash every year.

 

[Homerboy]

I've never ever heard nor seen of the "pre-paid CC" setup that you describe Fritzo, not to mention the "bank" putting money into a market fund that gains interest for you and the withdrawal at retirement.

 

[Numenorean]

A place where I used to work would give you a yearly amount in a flex HSA account. They gave you a debit card to use.

Well since I never got sick I just withdrew it all from an ATM and spent it on whatever the hell I wanted.

 

[zebano]

I elected to have $2500 in my Flex this year. 4 kids, 2 adults, $1,400 deductible + dentist + eye = it will get used. If you know you're going to have a child or have a procedure like Lasik done that year it is even more useful. It should be pre-tax.

I have a CC that makes this easy to spend.

 

[Gooberlx2]

Lot of strange ideas as to what HSA flex accounts are.

Be careful not to confuse the terms. There are Health Savings Accounts (HSA) and then there are Flexible Spending Accounts (FSA). Flex accounts are use-it-or-lose it and can be combined with any health plan (or no plan at all possibly).

HSAs require the HDHP and act similar to a retirement account regarding unspent funds, as you explained.

 

[CPA]

Lot of strange ideas as to what HSA flex accounts are.

These accounts are actually pretty useful. They have to be paired with a High Deductible Health Insurance plan. The idea is your health care comes out of your pocket for the first $2500 or so (this varies). If it goes above that, you're 100% covered. The money before your deductible comes out of your Health Savings Account.

Health Savings accounts are kind of set up like free checking accounts at your bank. You have the freedom to use any bank you wish for your account (although your employer usually sets up a bank by default, you can change it any time). You put money in your savings account- usually pre-taxes- and it's usually deducted directly from your paycheck. If you have it deducted post-taxes, you have to organize your spending receipts and you get deductions when you file your taxes, which is a pain. Pre-tax is much better.

The account itself usually gives your a Mastercard of Visa debit card. When you have a medial expense, you can either charge it to your card, or write a check. If you don't have enough to pay for a bill, most doctors allow you to make payments out of the HSA account (say, $50 per pay).

These accounts are actually pretty nice if you're healthy. The money stays in the account, and if you accumulate over $2000, many banks will put the money in a market fund that gains high interest. You can even withdraw remaining funds when you retire tax free.

If you have medical problems or use expensive prescriptions, you may want to consider traditional insurance with prescription coverage. Otherwise you'll be forking out a lot of up-front cash every year.

huh, this thread is about pure FSA's, not HSA's. They are two different things.

 

[JulesMaximus]

We have it here at work but I wouldn't touch it with a 10 foot pole. Over the past few years I just hear nothing but complaints about hoops to go through for reimbursements. On top of all that, if you don't spend the entire amount pulled out of your checks, you lose it at the end of the year. Too much hassle for very little to get out of it (reduction of $ for taxes)

If you're using it to pay for daycare it makes a lot of sense. Say you make $50,000 a year and you spend $10,000 a year on daycare.

No FSA:
Taxable income: $50,000
Tax @15% $7,500

FSA:
Pre-tax income: $50,000
Flex spending ded: $10,000
Taxable income: $40,000
Tax @15% $6,000

The flex spending money is taken out pre-tax so you don't pay taxes on that money. Granted, daycare expenses are tax deductible but using the flexible spending account still saves you a lot more than just deducting it on your 1040.

 

[CPA]

If you're using it to pay for daycare it makes a lot of sense. Say you make $50,000 a year and you spend $10,000 a year on daycare.

No FSA:
Taxable income: $50,000
Tax @15% $7,500

FSA:
Pre-tax income: $50,000
Flex spending ded: $10,000
Taxable income: $40,000
Tax @15% $6,000

The flex spending money is taken out pre-tax so you don't pay taxes on that money. Granted, daycare expenses are tax deductible but using the flexible spending account still saves you a lot more than just deducting it on your 1040.

Just for clarification, IRS only allows $5,000 to be withheld annually for an FSA, whether it's a medical FSA (goes to $2,500 in 2013 thanks to Obamacare) or a childcare FSA.

 

[Fritzo]

huh, this thread is about pure FSA's, not HSA's. They are two different things.

Oh, well then, get an HSA. It's better

 

[JulesMaximus]

Just for clarification, IRS only allows $5,000 to be withheld annually for an FSA, whether it's a medical FSA (goes to $2,500 in 2013 thanks to Obamacare) or a childcare FSA.

You are correct sir. I haven't had to use this in a few years so I forgot about that. It still makes it well worthwhile to take advantage of this though.

Just make sure you keep your reciepts and submit them for reimbursement regularly.

 

[CPA]

Oh, well then, get an HSA. It's better

My company's HSA is priced to high, meaning you have to take the highpriced, high deductible medical plan. We only have a handful of our 42,000 employees that have it.

 

[Bignate603]

Oh, well then, get an HSA. It's better

I can't get it with my company, but we also have a deductible of only $600. I'd consider a high deductible plan with an HSA but right now we don't have that option open to us.