Right FSA amount for tax savings

For a married person with annual salary 100K (deductions = 5), what should be the ideal amount to be put in FSA (flexible spending account)?

Next year's premiums has increased considerably and am trying to see if by contributing to a FSA (employer sponsored) can save me some money.

Appreciate your thoughts!

Do you max out your 401k? If so, your should max out HSA next.

You mention "HSA" and "flexible spending account" in the same sentence as if they're the same thing. They're not.

Health Savings Account (HSA) = account that accompanies a high-deductible insurance plan, where you can accrue money tax-deferred (tax-free if used for health purposes) for years.

Flexible Spending Account (FSA) = account that lets an employee, regardless of insurance plan, put pre-tax money in an account to pay out-of-pocket medical expenses. If not used up by the end of the year, you forfeit the balance.

If you mean an HSA, then the more you contribute, the more you'll save on taxes. Well, actually, the same thing is true for an FSA, although the tax savings aren't worth it if you won't use up the money.

My employeer puts in $500 into your HSA each year if you choose that option. Is this pretty standard or a real "perk" compared to most plans? (This $500 does count against your yearly max so I can only contribute $2550).

cheezedawg said: With the plans offered at my work, I could not find a single scenario where the high deductible plan with HSA would end up costing me more total than the traditional PPO and HMO plans. Plus, HSA's just kick ass.

Same boat here. I had this girl at work add up her medical visits and it turns out she paid $700 more for the PPO plan than she would have with a HDHP

quizzer25 said: Its the FSA that am talking about and not HSA.FSAs are great, FOR ME TO POOP ON.

quizzer25 said: For a married person with annual salary 100K (deductions = 5), what should be the ideal amount to be put in HSA (flexible spending account)?

Next year's premiums has increased considerably and am trying to see if by contributing to a HSA (employer sponsored) can save me some money.

Appreciate your thoughts!

HSA does not equal flexible spending account.

HSA = health savings account. You can put money and NOT spend in current year, and roll over to future years, and spend in the future. Money sits in some kind of an yield earning account. Contributions are tax free, interest and yield is tax free, and you spend the money ONLY on medicate expenses, but tax free.

Flexible spending account sounds like one of those "use it or lose it" tax-deductible reimbursement plans.

If you have the means, you should max out the HSA. It is basically tax-free money, more or less.

On the other hand, if you have planned expenses, you might not want to get a high deductible plan at all. A high deductible plan is a requirement for HSA.

quizzer25 said: How do i update the title?Just click the Edit button in your original post and you'll see it.

quizzer25 said: Thank you. Its the FSA that am talking about and not HSA.
.Please edit the post since its very confusing to other readers

Anyone know where the thread went on suggested ways to use up your FSA balance (purchasing over the counter drugs, etc)? Having difficulty finding it through the search tool.

From this link (which was inside the previously linked FWthread)....

* Over-the-counter drugs. Thank you, IRS, for deciding back in 2003 that allergy medicine, pain relievers, antacids, and a host of other medical goods available without a prescription are eligible for FSA spending. If your FSA year is coming to a close, check the dates on everything in your medicine cabinet and make a trip to the drug store to replace the expired ones. Also, anti-fungal creams make great Christmas gifts for the entire family, so stock up! Unfortunately. there’s one item that’s “missing” from the list of covered medications: vitamins. That said…
* Vitamins … if your doctor says so. We’ve been told for years that a multi-vitamin as part of a balanced diet is good for us, and so millions of us take those vitamins without so much as a suggestion from a physician to do so. Instead, talk about vitamins with your doctor and convince him to give you a letter of medical necessity that will make those vitamins eligible for FSA coverage.
* Baby factories. If you’re trying to crank out the kids and you find that you might need a little help from modern medicine, these expenses can be covered by your FSA. All the bases from extraction to injection are eligible: embryo and sperm storage, in-vitro fertilization, and even sperm washing! (I don’t think I want to know what that last one is.) Of course, if you’ve got all the children you want, or you’re happy keeping the kid count at zero, there’s also…
* Condoms. While being a good Catholic boy keeps these out of my medicine cabinet, condoms and various other birth control implements are just screaming for your FSA dollars. Heck, I know a few people who could hit their employer’s FSA maximum every year with just this category! You can even get more permanent methods of birth control performed with FSA money.
* Contact lenses and eyeglasses. Tired of running into walls and the wrong bathroom at work? It might be time for a new pair of prescription glasses or some contact lenses. They’re fully eligible, and they can even be used to start fires if you’re ever stranded on a desert island. Me, I’d like to be stranded on a dessert island, so I might need the next item when I make it back to civilization…
* Weight loss programs. If your doctor tells you it’s time to lose that extra 600 pounds, you may be eligible to put FSA money toward the various costs associated with doing so.
* Counseling. Depressed? Insane? Underperforming in the bedroom? Many types of licensed counselors are FSA-eligible and waiting to talk to you about your childhood or your obsession with sniffing women’s shoes.
* Dancing lessons. Some doctors think dancing will help you recover from injuries faster, and they’ll sometimes even prescribe it! If they do, you’re in luck because you can use your FSA to pay for the lessons. Just please, don’t break a leg on purpose so you can learn to tango.
* Flu shots. The best tax-free dollars you’ll ever spend on your health.
* Laser eye surgery. I really wish this meant that you could get attachments to make lasers shoot out of your eyes, but being able to see better is nice, too. This can be pretty pricey and many insurance companies won’t foot the bill for it. Using your pre-tax FSA dollars is like a 10-30% discount for expensive elective procedures like this one.
* Transferring medical records. Sometimes you’ll have to pay a small fee to have your old doctor send medical records to your new one. It’s probably just a few bucks, but why not use your FSA dollars instead of the ones in your wallet?
* Orthodontia. If you’ve got four kids with crooked teeth and a big chunk of your weekly paycheck is going to paying for their braces or other orthodontia, use FSA dollars that might be forfeited at the end of the year on any such items you may have on an installment payment plan. Or just use FSA cash to pay for them in full at the time of purchase.
* Alcohol treatment. Give the gift that keeps on giving: send your drunken spouse to a rehab clinic, and pay for it with his or her FSA dollars.
* Swimming pool/spa. Remember how vitamins are eligible if your doctor gives you a note? So are swimming pools and spas! If you can convince your doctor (or your doctor convinces you) that a swimming pool or spa would be of benefit to your health, your FSA dollars can be used to pay for its installation and maintenance. I don’t think there’s a person alive who wouldn’t experience some health benefits from a swimming pool… well, maybe people with hydrophobia. Unfortunately, any “The government helped me pay for this pool” signs will have to come out of your own after-tax pocket.

Yes - it is when the expenses are incurred, not when the bill is actually paid.

SSlacker said: Someone with an High Deductibles Health Plans(HDHP) is less likely to see a doctor for routine checkups and do routine work as each visit will be money taken out of the account. A traditional PPO, however, one feels that they are already paying for the service already and any routine work is already covered and money will be wasted because he or she doesn't obtain the service.

Let's not forget the real reason for insurance: it is not about co-pays and prescriptions, but is about how covered you are if something really bad happens to you. Hense the name insurance.Way off topic. This thread is about determining the amount of money to put in an FSA.

Note that the election period has surely closed, but for purposes of future years, it should be noted that same FSA plans allow a grace period for expenses - so expenses incurred from 1/1 - 3/15 of the following year can also be paid out of the prior year's FSA. In that case, it makes sense to fund the FSA to that total amount (e.g. 1/1/10 -3/15/11)

That way, if there are unexpected expenses in 2010, you can still pay for them out of the 2010 FSA plan year. If not, you can use up the 2010 FSA plan during the first 10 weeks of 2011

SSlacker said: I was responding to an earlier comment that that said HDHP are cheaper than PPO, and did not want anyone choosing HDHP based solely on costs as there are other things to consider in a health insurance plan.
Again, OT, but it's often true that the HDHP plan is cheaper. We had the choice of a PPO, HDHP with employer-funded HRA, or HDHP with HSA, all of which used the same insurance company and provider network. I ran the numbers, and found that the two HDHPs were cheaper than the PPO as far as total costs under almost any scenario. (I say "almost," as there were some improbable scenarios with very high prescription spending and low spending on services where the PPO came out better, due to its use of prescription copayments.)

Someone with an High Deductibles Health Plans(HDHP) is less likely to see a doctor for routine checkups and do routine work as each visit will be money taken out of the account.
Federal rules allow a plan to qualify as a HDHP even if it doesn't apply the deductible to routine wellness care. Our HDHP covers annual exams, required vaccinations, etc. at 100% with no deductible. That wasn't true of some PPOs that we've had in the past. Coverage for such things is an important criterion, but one that is unrelated to the HDHP vs. PPO distinction.