POLL re: flex medical spending accounts

[woo me with science]

Poll question: POLL re: flex medical spending accounts

Do you have a flex spending plan through your health insurance at work?

In these accounts, a portion of your salary is put pre-tax into a plan for medical spending. Then you deduct from that account throughout the year for your medical needs.

At the end of the year, what you have not used disappears.

Who gets this money? Your employer.

That is the part I don't understand. How is it justifiable for your employer to just TAKE the money you don't use? I saw references to a "study" online (with no link, though), saying that the average person has 100 dollars left in the account at the end of the year, that goes directly to the company.

Please answer my poll about your personal experiences with flex plans. Did you use all your flex money? Did you use enough to make it worthwhile (i.e. was the tax savings enough to counterbalance anything you lost?) Did you end up paying for things you didn't need, just to use up the money?

What's your verdict on these accounts?

[quaker bill]

1. They can and do deny claims

to your own money, what more needs to be said.

[Ilsa]

2. Getting your claims paid is getting more difficult.

This last year I ran into more denials for stuff that absolutely should be paid. It's turning into a real hassle. For 2011, we decreased what we are putting into it because of these difficulties.

[jeff47]

3. If you have regular, fixed medical costs it's a good deal

For example, if you're going to be taking a particular medication all year, or if you get a check-up every year.

If you don't have regular costs, it's not a good deal.

[aikoaiko]

57. truth -- FSA enabled me to spend another $1250 on health care costs.

I maxed my pretax contributions out at 6k every year I could.

[MindPilot]

4. I think they are--maybe not a scam--definitely a gamble.

I opted out for next year after watching $250 vanish this year. If I'm going to throw away money like that, I'll do it in a slot machine and have at least some chance of a return.

Like 401ks, I really hate these over-complicated "benefits" that require some prescient abilities to determine what my health or the stock market will do next week or next year. Take some of my pay and put it in a pension fund for retirement and let me deduct my medical expenses on my taxes. Is that SO fucking hard?!

[Warren Stupidity]

5. It is a crapfest of republicanism.

This is republican health care finance reform in a nutshell. Individual savings accounts, each one getting a management fee. This is the way they think the whole system should work.

Plus they suck. In addition to the year end money in the dumpster feature, you spend a lot of your time documenting claims, frequently several times. Somehow your time is 'free'.

[woo me with science]

6. How is your employer entitled to just TAKE the money you don't use?

That is the part that I find offensive.

A webpage online referred in passing to some "study" (but didn't give a link) that supposedly found that the average person has 100 dollars left at the end of the year, that goes straight to the company.

Essentially, to get the pre-tax benefit, you enter into a guessing game about what your medical expenses will be. The worse your guess, the more the employer profits.

Plus, I really do wonder how much money people end up spending unnecessarily just to "use up" the money in the accounts.

[Doctor_J]

15. That's part of what it is - the contract

If you don't like that part you don't have to enroll.

Edit: It also goes to pay overruns. If a person uses up his yearly health care flex money in February (legal), the leaves the company in March, the 9 months of his health flex payments are gone - company is on the hook.

[woo me with science]

17. I get that.

There's just something unsavory to me about the idea that they could take the contents of the ENTIRE account, say, if someone thought they were going to have significant expenses but ended up not having any.

I suspect a lot of people lose a lot of money in these, and it is probably the people who don't budget money well in the first place and don't really understand how the accounts work.

I am still trying to figure out where I stand on these. That's why I posted a poll question, rather than a manifesto.

[Statistical]

24. Then look into an HSA instead. They rollover for life and can even be used for retirement income.

[MindPilot]

72. That's not accurate...or at least not in my experience.

At my previous employer during one of the mass layoffs, it was explained very clearly that any overruns would be deducted from our final pay. So the good part is that you do have the entire amount available up-front, but basically all you've done is taken an interest-free loan from your employer. You can pay it back over the year, or in a lump sum when you leave, but you will pay it back. And if you leave with money still on the books, the employer gets to keep that. The employer will either break even or win; they will never lose.

[Statistical]

74. Nope. IRS regulations prohibit that.

If you leave/fired/terminated early and you have used more than the prorated portion the company takes a loss.
It is rare but it happens.

[MindPilot]

75. Then the company broke the regs.

It was made very clear to us that's what was going to happen. I didn't have an account so it didn't affect me personally. Maybe this was some weird loophole because it was an "early retirement" sort of layoff. Maybe the person running the meeting had bad information and it didn't actually happen when it got down to the nuts and bolts of calculating the final pay.

[Statistical]

76. I think the later is correct.

Either the person was misinformed OR was spreading misinformation so people wouldn't go out and use the funds.

People don't use the funds = company doesn't lose money. :(

Sadly like in many other areas people don't know their rights.
http://www.kiplinger.com/columns/ask/archive/2009/q0402.htm

[Doctor_J]

95. Not at my place. Two years ago when we over-estimated our

expenses, I called the HR guy and asked what happened to the overage. He said it goes to pay off the underage that I described. What we did was on the last day for claiming (Mar 31), went to CVS, bought $200 worth of OTC elligibles, and donated them to the local women's shelter.

[aikoaiko]

58. Over the last 5 years, I had to document 1 claim. Sent in one receipt.

[Warren Stupidity]

67. Over the last 18 months at least one dozen claim issues.

[aikoaiko]

96. Do you get to use a debit card?

Or are all your claims done after the fact?

[robcon]

7. It's a great deal for me.

Saves me several hundred dollars a year for my family, and I expect to save even more this year (major surgery scheduled.)

[WillowTree]

83. Me, too.

In November every year I figure out what I think my out-of-pocket medical expenses will be for the coming year. The trick is to try to get close, but not overestimate. You should try to set your contributions to the FSA so that you can be reasonably sure that you will exceed your plan contributions by at least a little. And try to do anything that you've estimated a large amount for early in the year. If for any reason your employment terminates, if your account has a negative balance, you don't have to re-pay that amount.

One year I knew that I was going to need some dental work and my dentist and I figured that my portion, after what my dental HMO pays would be in the vicinity of $1,200. I take only a few prescriptions and don't have many other medical expenses, so I think I set my FSA up at $1,300 for the year. I easily used up the extra $100 that year and then some, but that's the most I've ever put in because my expenses usually aren't nearly that high.

This past year I was planning to quit smoking and, being a major chain smoker for many years, I figured I'd need lots and lots of nicotine lozenges if I was to have any hope of success. Those lozenges aren't cheap, so I put in a pretty good chunk of money for those and about $200 above that. As it turned out, I didn't use even one whole package of the darned lozenges (didn't need them.......I've been smoke-free eight months as of last Tuesday.......YEA!!). So through the year, I filed every Rx co-pay, every bottle of contact lens solution and Ny-Quil and every package of ibuprophen and anti-fungal I got. I also got myself a temporal scan thermometer which I love and a new BP cuff and heating pad. Come December, I re-filled all of my prescriptions one last time and I'll go over my estimate, even if only by less than $5, but I won't lose any money on it.

This coming year I know I'm going to need new contact lenses which I'll get in January so I've figured in for those. If I find out that I overestimated what I'll need for the lenses, I'll get a new pair of glasses, too. Then I added a couple hundred over for miscellaneous. It's safe to assume that between Rx co-pays and such, I'll surely use up every dollar that I put in and go over a bit. But it's no-harm, no-foul if you run over. You'd have to pay after-tax dollars for all of it rather than just the overage if you didn't have the FSA, so you're still ahead of the game.

If you use your head, make reasonable estimates and do things that you've set aside large amounts for as early in the year as you can, an FSA can save you money and make it a little easier to pay for your out-of-pocket medical expenses

[OneTenthofOnePercent]

8. If you have fixed or expected costs... it's a great deal.

NOT a scam.

Let's say you are planning a pregnancy. Well if you know about how much that will cost you can set aside money for the low-side estimates and you end up saving taxes on that cash. That's like getting 10-25% more money for hospital bills.

It's an unwise decision to put too much in a flex spending account.

[woo me with science]

23. This seems to be the theme running through this thread.

Used wisely, they can be a good deal, but there are risks and pitfalls to watch out for.

Thanks.

[nashville_brook]

9. i had used one with no problem until this year...won't re-up.

[mopinko]

10. they are a good deal for us, as we always have more

expenses than what is allowed. but for the life of me i do not understand why that money can't be accumulated for several years. hell, for an indefinite number of years.

[woo me with science]

25. I think you just crystallized

my problem with them.

[mopinko]

49. when medical expenses are the biggest cause of

bankruptcies, and you have a tool that could help people deal with those sort of expenses, and you don't even think about using it, you are nuts. most of us are going to run up a hospital bill on our way out of this life. why wouldn't you make it easy for people to save up for the inevitable?
it's bullshit.

[reformedrethug]

11. I have had one for several years

and have NEVER had any issues. We get a "credit card" issued and all we do is swipe the card whenever we want to use it. Works at the Dr's office, CVS, no problems at all.

[mmonk]

12. Bad idea like the health "savings" account I have.

Does not address the problem with our system.

[woo me with science]

27. Well, this is the most salient post in the thread IMO.

I agree with you completely.

[mmonk]

82. Thanks

:)

[aikoaiko]

62. Do you always judge something by a purpose for which it was not intended.

It wasn't intended as a game changer.

[mmonk]

81. Something needs to be.

Otherwise, why bother? It's nothing but continued cost shifting that continues upward.

[aikoaiko]

92. FSAs put extra money in the hands of the middle class just for medical expenses.

True health care reform is no where close to a reality and FSAs helped.

[Shandris]

13. My last year at my previous company, a very anti-liberal and well-known...

...Fortune 100 Corp subsidiary, our benefits were completely changed over to one of these FLEX spending accounts. It didn't take long for me to notice that 'they keep whats left over' part that was glossed over SO FAST in the presentation that of the 40 people in the room, 35 claim they never heard it said. The representative told us in follow-up (a follow-up he wasn't too happy about, seeing as no one else asked about that part) that everything even remotely health-related was involved, even saline solution for contacts, so there was virtually no chance that we would leave money behind.

Naturally, by the end of the year, the company had made a goodly chunk of change and several of the employees were very, VERY upset about the 'new' type of benefits. Seems people either underpaid by a lot (because FLEX offered no real alternative to catastrophic injury/illness/hospitalization), or overpaid in the name of caution and lost almost all of it.

They may have changed some in the intervening 8 years, but the experience itself was enough to make certain I'll never entertain the idea of an FSA.

[Statistical]

38. You do know you have insurance + FSA right.

Why not put a small amount in FSA (say $300) to cover the medical expenses (RX, copays, OTC drugs, saline solution, bandaids, neosporane) that you know you will have.

[Shandris]

77. At the time I describe...

...our regular insurance was being replaced by the FSA. It was one or the other. Like I said, its been a while, so they may have worked out some of the initial kinks.

[customerserviceguy]

14. I've always thought flex spend plans

were way more trouble than they were worth, unless you're in the top tax bracket, and you know pretty well what your medical expenses will be, because of a chronic illness.

The only thing more degrading than begging the employer's claims handler for your own money back, is filing with the IRS to get a tax refund.

I use an HSA, all the money is mine, and I'm not feeling compelled to spend anything at the end of the year. I also don't have to say, "Mother, may I?" when it comes time to cover an expense through it, I just whip out a debit card, and pay the expense, like I did with my eye doctor last week.

Flex spending accounts are a part of medical inflation, every year at this time, there's a flood of money that gets spent without regard to whether or not the patient is getting a good deal.

[Lars39]

16. *Always* underestimate the amount you'll need.

I'll be using mine to get much needed durable medical goods and PT, starting in January, instead of having to wait until June or July. I look on it more as a budgeting tool that allows me to take some of the angst out of my health care needs.

[Sheepshank]

18. It's always been clearly stated and re-iterated

that you lose what you don't spend. Doesn't matter to me who gets the money. I just make sure i spend everything every year. It's really not too hard to get on line and track balances. I used to use it for daycare too...what a deal!!! For those that thinks it's and employer scam, I suppose it would be better if it went to the Feds?

I prefer and like not having to pay taxes on that money and in the long run it saves me hundreds of dollars. I currently have two kids in braces....well, well worth it. Not only do I not pay taxes on that money, but I am able to withdraw the entire allotted amount up front (even before making the full contribution) and get to cash in on the discounts for paying my portion of the orthodontic work, up front and in full. Win/Win for me.

[ellenfl]

19. so with an hsa you have to pay for all your medical expenses

out of your own pocket with the only benefit being the tax break? i don't even get that as i pay half of my bf's premium for which he gets the tax break. how can an hsa be considered health insurance since you're basically insuring yourself? what am i missing here? please explain. thank you.

ellen fl

p.s. we're on a ppo now, with premiums that will be going up 60% next year.

[Statistical]

22. Premium tends to be much lower.

Note the OP is talking about FSA (not HSA) which is totally seperate. FSA isn't "insurance" it is used to make health epxenses tax free in conjunction with insurance. You have insurance and then pay copays, deductibles, other expenses from the FSA tax free. So you have a PPO now you could have a PPO plus a FSA with $300 to pay medical costs (portion insurance doesn't cover) tax free.


Still you asked about HSA which is different. Here is an example of when HSA works. It requires a HDHP - High Deductible Health Plan which has at least a $1200 deductible ($2400 family). The premium is usually a tiny fraction of what traditional insurance is.

An example:
My wife has better health insurance plan than me so we use hers. The employer + spouse "normal" PPO plan costs roughly $340 a month. It has a $500 deductible. Decent copays and 80% coinsurance on major stuff after that. Annual cost for deductible + premiums: $4604.

Alternatively there is a HDHP which is $52 per month however the employer also kicks in a "free" $500 into an HSA. Thus net-net the annual cost is $124. We end up putting another $3500 into HSA each year. So total cost is roughly: $3624.

Traditional plan: $4604 (premium + deducitble) then everything is covered 80%.

HDHP plan: $3624 (almost $1000 less) and we have $4000 in the HSA each year. This covers the $2400 deducitble, plus other medical expenses.

It doesn't work for everyone but it does work for some people. Now remember HSA funds never expire. So we have been using this HDHP + HSA for 4 years now. Each year our total expenses has been less than what we put into the fund so it keeps growing. Now the HSA has over $9,000 in it.

Note: FSA and HSA despite similar names are completely different.

[ellenfl]

28. so, let's say we go with the hsa and my bf ends up having

another quad bypass this year. who picks up the balance of the cost after we have depleted our hsa?

tia

ellen fl

[Statistical]

30. Lets say you don't have an HSA and your bf has a quad bypass who picks up the balance?

You.

HSA - you w/ tax free account.
No HSA - you w/ no tax savings.

[ellenfl]

33. currently the insurance company would pay for most of the cost.

if i have an hsa, i don't have an insurance company picking up most of the cost for a catastrophic event. right? i can pay 20% but will end up on the streets if i have to pay 100%.

ellen fl

[Statistical]

34. No. HSA is an account. It isn't insurance. One has insurance + HSA (or FSA)

Insurance doesn't pay everything and often the portion they don't pay can be a lot. HSA/FSA are a mechanism to save money for the portion insurance doesn't pay.

Four options
a) You have insurance + nothing = all expenses paid w/ cash out of pocket.
b) You have insurance + FSA = some/all expenses paid from FSA but funds expire at end of year.
c) You have insurance (HDHP) + HSA = some/all expenses paid from HSA, funds never expire
d) You have no insurance

There is no possible solution where having an HSA with piles of money in it is worse than having no money saved. I mean maybe an HSA won't have enough funds to cover years of chronic illness but then again maybe you wallet won't either.

FSA = NOT INSURANCE (used with insurance)
HSA = NOT INSURANCE (used with insurance - HDHP)

[jeff47]

50. That depends

If you only have an HSA, it's you.

But HSAs are usually paired with a high-deductible insurance plan. If that's the case, you'll reach the threshold where the insurance kicks in and pays for the expenses beyond the deductible.

[Statistical]

53. A clarification. You MUST have a HDHP to contribute to an HSA.

Later if you have no coverage or coverage that doesn't meet the requirements of an HDHP you can still use the funds in your HSA but you can't contribute anything to it.

Then again for younger Americans HDHP are available at very low cost even if not offered through your employer.


For example. In Virginia, a 30 year old male (non tobacco user) can get a HDHP with $3500 deductible, 20% coinsurance (plan pays 80% after deductible) and $5,000 annual max (no matter how much coverage you won't pay more than $5,000 in a year) for $55 per month.

Another options is a $2,500/0% plan. $2,500 deductible then insurance covers 100% of expenses (no copay, no coinsurance). Your max out of pocket is $2,500. That is roughly $20 per month more.

http://www.ehealthinsurance.com/

So if your employer offers no or crappy health insurance, get a HDHP and drop what you would normally pay each month for crappy employer based coverage into the HSA. i.e. if your employer has crappy coverage and it is $350 a month instead of doing that pay $55 for private insurance and drop the other $300 into a HSA (and save couple hundred or thousand in taxes). Yeah it has a $3,500 deductible BUT you also have an HSA with $3,600 in it to take the "sting out".

[ellenfl]

56. thank you, all. it is becoming much clearer. i'm not a mental midget

(i CAN pronounce 'nuclear' :evilgrin: ) but this stuff can be confusing . . . especially since i get the info second hand from my bf, who is the primary on the policy. i think this will help me to understand what his employer is offering.

ellen fl

[Statistical]

61. np. the sad thing is in a civilized world you wouldn't have to figure it out.

providing for the common welfare is something that should be handled by the government.

There are a lot of things the government does that I don't think it should be but healthcare is something it should be and it doesn't.

[Statistical]

20. Use a HSA instead. Money rolls over and is tax free.

If you do use a FSA just be very conservative about it.

Don't try to "max it out".

Say you always go to the Dr at least twice ($80 in copays). You also know you need to buy contacts + contact solution + eye exam each year = $280. No matter what you likely need some pain relief drugs & cold remedy each year - $30.

So put $300 into the FSA. You know you will spend AT LEAST $300 a year on health care. If you don't well that is pretty damn sweet huh.

Don't try to put $5000 into FSA "just in case" put what you know (or are rather likely) to use.

[MH1]

69. HSA tax free but the 'bank' makes a bundle

I have an HSA and overall it's a good deal but it burns me up a little that I have to have a separate account at a 'bank' I never heard of before. And they take a significant fee until you build up a certain balance. But because of restrictions on how much you save, it takes more than a year to build up to the minimum balance.

FSA = scam. HSA = scam-lite.

[Statistical]

71. True. However HSABank minimum is $3000 which can be met first year.

http://hsabank.com/hsabank/Accountholders/Rates_Fees.aspx

Fees are pretty decent, and interest is better than most.

I don't know anything about them but Xceed Credit Union offers no fee HSA (no monthly fee, no setup fee, no checking fee) and no minimums.
http://www.xfcu.org/products_services/accounts/health_savings.aspx

[madfloridian]

21. How does it work with catastrophic unexpected events?

One stay in the hospital can mean 10s of thousands of dollars.

[Skittles]

26. it doesn't

you have to be able to forecasts your expenses because it's a use or lose deal

[madfloridian]

80. That's pretty tragic if an emergency happens. Would be financially devastating.

[Statistical]

85. How would the situation be any worse w/ FSA/HSA vs no FSA/HSA?

[madfloridian]

87. Is this in place of insurance?

I was thinking of having no access to catastrophic, major health care if needed.

A person could go bankrupt in one serious illness. :shrug:

Not sure how else to explain it?

[Statistical]

89. this is not in place of insurance. it is used to saved funds tax free

for the portion of medical care which is NOT covered by insurance.

[Skittles]

29. I used it for dental work this year, and will do same this year

what I did was get estimates from my dentist for what the work would cost and what my insurance would pay, and flexed what I would pay - I got the work done in January and received the check for the entire year - so essentially the savings I got was because that money was not taxed

[woo me with science]

31. Thanks all.

Can't answer everyone individually, but I really appreciate the thoughts and personal experiences.

[grahamhgreen]

32. It's a total scam. You should just get the tax break on all medical expenses. Medicare for All. nt

[Wednesdays]

35. It's fucking shell game.

YOU are responsible for a whole shitload of paperwork, and if YOU don't file it on time, YOU lose YOUR own hard-earned fucking money. You have to get a receipt from your doctor, fill out a specific FSA form, and submit it to a specific office by a specific time, or you're SOL.

And yes, we've been denied claims to OUR money...to the tune of thousands of dollars.

Of course, they could have a system in place where your doctor's or pharmacist's computers send the receipts directly to the FSA's system, but that would make too much sense (no need to shuffle around papers). Of course the REAL reason they don't do that is, it cuts down on your FSA's bottom line. :puke:

[Statistical]

36. Far easier than that. You get a VISA debit card that deducts from the account.

You swipe the debit card and done. Save your receipts in case you are audited. Too easy.

Bottle of Tylenol - swipe
Copay at Dr office - swipe
Picking up RX from the pharmacy - swipe
Balance of bill from DR - swipe (well maybe not swipe but virtually all Dr allow payment by credit card or debit card).

I almost never file a reimbursement unless I forget and pay for something out of pocket. I can do reimbursements online, it takes about 2 minutes, and get deposited directly to my bank account in 4-5 days.

[Wednesdays]

39. Sorry, that does nothing to address the denials.

Nor does having a VISA (how ironic is THAT?) cut down on the paperwork that has to be turned in, nor the deadlines. We don't get VISA debit cards through our employer.

[Statistical]

43. There is no paperwork. There is no denials.

Dr Office. $50 copay - hand them the FSA check card. DONE. No paperwork, nothing to file.
Pharmacy. hand them the FSA check card. As far as the pharmacy is considered it is no different than any other "plastic".

[Wednesdays]

44. You can't speak for my experience, only for yours.

nt

[Warren Stupidity]

68. Not my experience.

The card works sometimes, sometimes it doesn't. Not all pharmacies handle it correctly, as they have to have the back end that sorts allowed vs unallowed. Not all care providers even take the card. The really special thing about the card is that when it gets rejected you frequently have NOTHING to refile a claim with, as credit card receipts are not sufficient.

[rox63]

42. I tried it for a couple of years, and decided to opt out after that

Yeah, I had the card to swipe. But I would get form after form in the mail asking that I justify everything I used it for. Eventually, if I didn't produce every form and receipt, I'd end up losing money.

[woo me with science]

37. Thank you.

That was my gut response to the whole thing, honestly. But a lot of people here do seem to appreciate the tax break.

[aikoaiko]

59. How very different from my experience where I used a mastercard debit flex card.

[Robyn66]

40. it has worked for us so far

We have used it for our daughters braces. I did have a run in at the beginning and they qustioned the ORTHODONTIST that was clearly listed as allowed. They said "well we CAN question it and probably will again" How stupid was that. But they are still paying the orthodontist and it is OUR money after all!.

Anyway so far so good except for that little glitch.

[onenote]

41. I've never had any problem with my FSA

We have a pretty good idea of what our medical expenses are going to be each year, particularly prescription drug expenses, twice yearly dental, and annual eye check ups. We've never come close to being in the hole. Plus, we've never had any trouble getting reimbursed. I simply take the prescription info and/or receipt from the doctor and send it in. FSA even covers non-prescription meds and my local drug store includes on the bottom of every receipt the amount of FSA-eligible expense included.

I also take advantage of a Park-Flex program that works the same way: I set an amount that is used, tax free, to pay my monthly parking. Since I have a monthly parking account, its simple to send in the bill and get reimbursed.

[Better Believe It]

45. If it works for you, use it. If it doesn't, don't use it. It always works out well for us.

But, that benefit should always be available for those who have higher medical costs.

[bluestateguy]

46. HSA's are better

At least the ones I have heard of--other plans may differ--allow you to keep money in the account even if years go by without you using it. Hence, healthy people are not punished.

[Thav]

47. Any system that makes money disappear is bad.

I first thought, "Hey this sounds great" until I read that the money is gone if you don't use it. Anything that is listed as a "benefit" that can cause your money to disappear isn't a good deal.

[Sancho]

48. It works well for me...

It's a pain to learn how it works, but if you have regular expenses that you can estimate, it saves money. It would not be for everyone.

[PBS Poll-435]

51. They are Teh Awesome

Well, it actually depends on your carrier.


Wage Works is a pain in the ass, (keep all of your receipts!).

But it helps you budget your money.


Use the card until 12/31, and then you can still use the account by manual reimbursement until 4/15 for the previous tax year.

[tammywammy]

52. I have one and have never had issues with it.

I can predict next year's out of pocket cost and that's how much I put into my FSA. Getting the money back isn't an issue either, fill out one form, have a copy of the receipt and fax in. My prescription that's mail order is auto-sent to them, no paperwork on my part. And I have the money deposited right into my checking account. I think it's a good deal.

[REP]

54. Starting next year, ours rolls over

Now I'm off to buy more glasses to drain this years.

[Lisa0825]

55. I used mine for the first time this year and it was fine... I can use up the balance during the

grace period by sticking up on OTC products. But now that they will no longer allow you to use it on OTC without a prescription (wtf does that mean? no OTC or now even OTC need rx??), I have canceled mine. They want to make it harder for people to cash it all out and not leave money for the plan administration, so screw that.

[aikoaiko]

60. Is getting a debit style card normal for FSAs? I had one and assumed it was normal.

Using a FSA debit card made it really easy to draw on the money, but it sounds like a lot of folks have to pay out of pocket and then submit claims. I can see how that would be a major hassle.

[tammywammy]

63. I submit a claim, but it's not a hassle really

I just fax in the form with my receipt and the next week it's deposited into my checking account. Except for my mail in prescription, they get auto notified about that and automatically, so I don't do anything for it.

edited to add: I've never had anything denied either.

[aikoaiko]

64. the FSA has been very helpful with my family's med bills. I'm sad to see it reduced to $2500

For the last few years, I've used every dollar of my maxxed out FSA -- $6000 per year.

[fortyfeetunder]

65. OTC meds will be tougher to purchase on FSA or HSA come Jan 1

Prior to Jan 1, 2011, it was relatively easy to buy OTC meds with a FSA or HSA


http://moneywatch.bnet.com/retirement-planning/blog/retirement-beat/fsa-and-hra-alert-for-2011-tougher-to-get-reimbursed-for-otc-meds/973/

"Beginning January 1, 2011 any OTC drug purchase can be reimbursed only if you’ve obtained a prescription for it. Yes, that is a bit oxymoronic; you will indeed need a doctor’s prescription for an OTC medication if you want to pay for it with tax-free dollars you stuffed in your FSA/HRA. And if you’ve been enjoying the convenience of using an FSA debit card to streamline your OTC drug purchases, well, you might need to kiss that goodbye as well. In many instances consumers will be required to shell out after-tax dollars from their wallet to cover a drug purchase and then submit the receipt, with companion prescription, for reimbursement...."

"* This only impacts medications. Crutches, Band-Aids, condoms and other medical goods covered by your plan will not require a prescription.
* The debit-card ban applies only to drug purchases. You can continue to use a debit card for non-medicine purchases covered by your plan.
* Insulin is exempt. In case I’m not the only one who wasn’t aware of this: some types of insulin do not require a prescription. Those drugs will continue to be reimbursable without a prescription
* Even if you are allowed to file 2010 claims into early 2011, the new rules apply. Any drug purchase you might make after January 1, 2011 to “use up” your remaining leftover FSA funds from 2010 will need to have that doctor’s note. The one caveat here is that debit-card drug purchases made until January 15, 2011 will not need a prescription. That’s an IRS bone to help “merchants” adjust to the new system.
* The IRS is watching. If you somehow manage to use FSA money without following the new rules, the amount of the disbursement will lose its tax-break and will be added to your gross income. You could also be slapped with a penalty of up to 20 percent of the disbursement."

[eridani]

66. They're great for healthy affluent people

A wonderful way to suck health care dollars out of the system that would otherwise be spent caring for less affluent sick people.

[Statistical]

70. What? How does it suck health care dollars out of the system.

I put $1000 into an HSA/FSA and pay $1000 in medical costs vs pay $1000 out of pocket.

Where exactly is "health care dollars" being sucked out?

[woo me with science]

78. The employer takes what money is left over at the end of the year.

That is money that was earned by the employee and set aside for health costs, but if the person guesses wrong about how much he will need that year, the money is simply taken from him. Either that, or he has to buy health-related stuff he hadn't planned on buying just to "use up" the funds.

On average, 100 dollars per employee is supposedly just taken from them by the employer for the privilege of having this kind of account.

IMO that's money sucked away for no reason. I would have less of a problem with it if the money could be rolled forward.

[Statistical]

79. HSA can be rolled forward.

If you like that concept than HSA is superior to FSA.

Still even with FSA one simply needs to be ultra conservative with the amount allocated.

If in the last 5 years your medical expenses (everything form copay, to RX, to OTC, to store bought medical expenses) were
2005: $872
2006: $326
2007: $208
2008: $800
2009: $5829

then it would be silly to put $5000 or even $800 into an FSA. However putting aside $200 or maybe even $300 would be wise.

[REACTIVATED IN CT]

86. The employer could also end up losing money

There is risk on both sides. If employees submit big ticket claims early in the year (braces, lasix surgery etc.) and then leave the job (or get laid off) the employer can't recover that money. (Uniform Coverage Rule - they have to pay your entire elected amount out in claims at any time regardless of how much you have in the account) That's why an FSA is considered to be health insurance for COBRA purposes. If your employment terminates and you have a balance in your FSA account, they have to offer a COBRA continuation.

I've administered them but never participated since I didn't have regular, predictable medical expenditures.

eta: IRRC, the employer can only use the leftover money for the benefit of the plan participants.

[woo me with science]

88. What does that mean,

"use it for the benefit of the plan participants"?

As far as I'm aware, you can use only the money you put in. How does it benefit them?

As I said before, there's apparently been a study showing that the employer generally comes out ahead in this deal, to the tune of approximately 100 dollars per worker. I admit I haven't seen it, though.

[Statistical]

90. You can use more than you put in.

Say you setup a $4800 FSA ($400 per month).

On 1 JAN you have major surgery and pay for co-insurance from the FSA. - $3000
You continue working for 2 months ($800 paid into FSA)
You are terminated.

Technically you were reimbursed $3000 and put $800 into FSA. The overall plan is out $2200.

Any money "lost" at the end of the year remains in the FSA pool to pay for the pool cost (administration) and to offset losses like the one above.

The employer doesn't just get a check for your money. Any money lost by participants must remain in the pool to handle administration, and contingencies.


"there's apparently been a study showing that the employer generally comes out ahead in this deal"
No there isn't. That is your flawed assumption. The employer doesn't get the funds, the funds remain in the pool. Yes on average $100 is "lost" at end of year but that money is used to cover people who leave employment mid year, and plan overhead. The employer has no method to "take" the excess funds and thus never comes out ahead.

[REACTIVATED IN CT]

91. The employer can use it to pay the third party administration

fees. They charge a couple of dollars a month per participant and the employer generally pays them. The employer can use the leftover money (forfeited money) to pay those fees. They can also use it to make a contribution to the account of each participant in the subsequent plan year.




Experience gains
If an employee fails to use all contributions and benefits for a plan year before
the end of the plan year (and the grace period, if applicable), those unused contributions
and benefits are forfeited under the use-or-lose rule. Unused amounts are also known
as experience gains. The new proposed regulations retain the forfeiture allocation rules
in the 1989 proposed regulations, and clarify that the employer sponsoring the cafeteria
plan may retain forfeitures, use forfeitures to defray expenses of administering the plan
or allocate forfeitures among employees contributing through salary reduction on a
reasonable and uniform basis.


http://www.conexis.com/pdfs/Section125.pdf

[eridani]

93. Sick people with lower incomes get no tax benefits from this

They don't get their tax bills lowered for buying aspirin and bandaids.

[Statistical]

94. Yes they do FSA contributions are completely tax free.

That includes payroll taxes.

[MindPilot]

73. It will be a good deal when I can use it for medical marijuana.

Until then it's just borrowing money from my boss. (it would still be borrowing money from my boss, but I wouldn't care)

[awoke_in_2003]

84. I have one....

first year I have elected to do that. But with my wife's health it is almost guaranteed that at some time I am going to have to drop $1000 on some procedure.