Check With Your Employer About Flex Spending Accounts

Here is another way to save money.  Check with your employer about any Flex Spending Accounts they may offer. 

What is a Flex Spending Account you may ask?

A Flex Spending Account allows an employee to set aside a portion of his or her earnings to pay for qualified expenses.  This money set aside is deducted from your check before any of your taxes are calculated and are never reported to the IRS. The overall result? You decrease your taxable income and increase your disposable income which can save you hundreds or even thousands of dollars a year.

Qualified expenses typically include prescriptions, over the counter medications, services, copays and sometimes daycare or dependent care expenses.  You'll need to check with your employer to see what is eligible.  With our FSA you'll need to have a prescription from a physician even for the over the counter medications, but we just get all of our prescriptions for those at one time.  Yes, it's a pain, but it saves us a ton of money.  When you have small kiddos the amount you spend on OTC medications adds up quickly!

 

However, there can be a down side to this.  Make sure you calculate how much you will need precisely.  Because at the end of the year if you haven't used all of your set aside funds they will forfeit.  Yep, that's money lost - gone forever. So make sure you do your calculation thoroughly.

 

Example:

 

I made a list of the prescriptions that we definitely get each month = $40.36 a month (fixed amount)

 

I don't know when my children will get sick, but I can ball park it.  We pay $20 copay for each sick visit.  So far this year (2010) we made 4 sick visits to our Pediatrician.  So I'll use this guideline for next year (2011) = $80 

 

Now, remember when I said "Keep All Your Receipts"???  Yep, that comes in to play here.  I looked back and saw that we spent approximately $178 on OTC medications, band aids and first aid items.

 

Our Specialist Physician visits are $30 copays and I esitmate that we'll have 2 visits next year. = $60

 

My contacts cost $22 a box (2 boxes each) and I get them about every two months = $264

 

I've already paid for the next two year's eye appointments so I won't include that.

 

Our medical expenses (after insurance coverage) was nearly $900 this year, but this included my surgery and some other precedures that we will not have to worry about next year.  So, I'm estimating $275 medical expenses for next year.

 

Remember that it's better to estimate a little lower because you don't want to lose that money.  We're setting up to have it set up to take out $875 next year or approximately $73 a month.

This is just a guide!  Check with your employer and look at your expenses.