Rethinking Your FSA (Is my FSA still worth it?)

Your Flexible Spending Account (FSA) has undergone some changes over the years. Most notably, over-the-counter medication such as cough, cold and flu medicines and pain relievers cannot be reimbursed through your FSA, unless the items have a doctor’s prescription or another supporting document.

While it all may sound confusing and frustrating at times, these health-spending accounts are still among the best ways to pay for medical expenses that are not covered or paid in full by your medical, dental or vision plans—for you or any dependent.

This tax-advantaged account can help your dollar go much further. Here’s how:

Let’s say you put away $1,000 in your FSA for the calendar year. An average income will be taxed 25% by the federal government. Your FSA investment, however, is not taxed. The means you’ll have $1000 to spend on medical expenses, versus only $750. (That does not include state income tax, which varies).

And there are plenty of ways to use your FSA. Here are just some:

Doctor and hospital visits: Co-pays, deductibles, ambulance fees, diagnostic fees, laboratory fees, obstetrical care, surgical fees and x-rays.

Prescriptions: From birth control to cholesterol medication and any other medication you get from a pharmacy with a doctor’s prescription.

Dental and vision: From cleanings and oral surgery at the dentist’s office to eye glasses and eye surgery at the optometrist.

Therapies: This includes chiropractors, acupuncture, psychiatric care and hearing devices.

Other expenses: Crutches, wheelchair, even mileage to and from medical appointments.

There are many smart ways to cut your expenses.

Remember, you need to spend your FSA within the year—it does not roll over. FSAs are too important to your and your family’s financial well-being to be cut from your budget. Also, try these three saving tips:

  1. Visit your physician or an urgent care facility in non-emergency situations. For serious illnesses and injuries—such as heart attack symptoms, shortness of breath or a severe injury—the emergency room is exactly where you need to be. For less serious health issues—such as a late-night ear infection or a minor injury—a trip to an urgent care facility or your physician’s office can save you big bucks.
  2. Ask questions and get a second opinion. Each year, thousands of people have surgery they don’t need. In some cases, surgery may not be your best option and could lead to other health issues. If surgery is recommended to you or a covered dependent, research your condition, the risks, anticipated outcomes of surgery and the treatment alternatives. Ask questions about how much the procedure will cost and make sure to use in-network providers for your care if you go forward with the procedure (otherwise, you may end up paying a lot more than you expected.) Finally, make sure you get a second opinion from a medical professional. It may cost you a little bit up-front, but it could help you improve your health without a costly, unnecessary surgery.
  3. Compare your Explanation of Benefits (EOB) to the medical bills you receive for the services provided. According to a recent study by The Access Project, eight in ten medical bills have errors in them. Before paying your medical bills, compare them to the information on your EOB. If the amount you are billed by the providers doesn’t equal the “It is Your Responsibility to Pay” amount on the EOB, then you’ll need to do some additional research and contact your health plan or the service provider for direction about how to proceed. In some cases, you may have access to an advocate who can help you navigate this process and will act on your behalf.

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