Now is a great time to strongly consider participating in a healthcare flexible spending account (FSA). With the impending Family Act and many people not having insurance coverage for infertility related expenses, how can we get a break and save on infertility related expenses? HEALTHCARE FLEXIBLE SPENDING ACCOUNTS!
I know you have heard the term but thought they aren’t worth the hassle or just really don’t understand how it works. It is worth your time and money to consider this option. No, it will not pay for treatment but every bit of savings counts and the tax savings really add up. It really is an easy way to set aside money on a pretax basis and maximize savings for allowable health expenses including deductibles, co-pays and other qualified expenses. Pretax savings means that your contribution is reduced from your paycheck BEFORE Federal, State and Social Security taxes are calculated reducing your taxable income…. CHA CHING! Your employer should have a list of allowable expenses or a website that you can get more details. Often times, insurance does not cover any or at least some of our infertility related expenses BUT the FSA most likely does. Before you sign-up and commit yourself to the deduction contact your Benefits Administrator to get the plan’s rules and exclusions.
Some things that you might not know about the Medical Flexible Spending Account:
- You can contribute up to $2,500 annually
- The deduction occurs each paycheck reducing the impact
- You have access to the full amount once you enroll (see example below)
- Many vendors now offer debit cards which allow you to access the money without paying out of pocket
- Many vendors offer direct deposit for approved claims
Not only do you get a tax savings, you can also spread out the impact of a large medical expense. The FSA allows you to withdraw the money even if your contributions to date are less than the claim as long as the annual election is met. Please note, if you don’t have a debit card for FSA expenses, you will have to pay the medical expense out of pocket and then submit the claim for reimbursement. From my experience, the claim takes less than 1 week for reimbursement but that will depend on your administrator/vendor.
Example: If you get paid 2 times per month and have elected to contribute the maximum amount of $2,500, you pay cycle deduction would be roughly $104. If you incurred $3,000 in out of pocket charges after you have just had one pay check (and one deduction of $104), you would be receiving the full $2,500 from your FSA and the remaining deductions will be spread out over the plan year to make up the difference. Remember, the savings are in your taxes. The remaining $500 will be not be subject to the tax savings from the FSA.
There are some limitations to Flexible Spending Accounts. You can only enroll during your company’s open enrollment period or with a qualifying life event. You aren’t reimbursed for unused expenses so you need to carefully select the amount you want to contribute. Be conservative in your calculations unless you are 100% sure that you will be incurring at least the amount of your annual contribution in qualified medical expenses. With infertility treatment expenses, this should NOT be difficult but remember cycles can be canceled so choose the number conservatively!
If you have been using My Hopeful Journey to track your expenses, it is very easy to run the summary report to get a total for how much you have spent out of pocket on prior cycles. If you haven’t been tracking yet with My Hopeful Journey, give it a try. My Hopeful Journey is a free organizer designed specifically for infertility treatment and is very easy to use. We even have a mobile friendly app.. so use it on the go!
* I am not a tax expert, please consult your benefits administrator or tax professional for more details.