Many of you will be getting information from your employer about open enrollment options for your health care in the upcoming weeks.
Don’t just brush this paperwork aside or breeze through it. There is important information that can save you money. This is the time of year where you will determine if (and how much) you will contribute to a flexible spending account (FSA).
If you don’t know how an FSA works, it’s simple: You can set aside a portion of your earnings (using pre-tax dollars) to use for certain health care expenses such as clinic co-pays, prescriptions, and deductibles. You can also set up an FSA for day care expenses.
An FSA can help you lower your tax bill – which is the main draw for most people. But what I like the most about it, is that it forces me to budget for health care expenses – something that many of us don’t think about until they’re sick. My plan also uses a debit card – which means we don’t have to worry about paying for co-pays or prescriptions out of pocket when we’re sick. It’s been a huge convenience!
The downside to a flexible spending account is that if you set aside $1,000, you must spend it all by the end of the year or you’ll lose that money. Depending on how your plan works, you may need to either fill out paperwork to be reimbursed for your expenses, or you may be able to use a special FSA debit card like we do. Regardless of your plan, you must keep all of your receipts for claims you make against your FSA in case you are ever audited.
Be sure to check with your employer to find out all the details on your individual plan options.
The first year we tried having an FSA, we only set aside $500. I was worried about spending that money over the course of the year. HA! That figure didn’t even touch our family’s deductibles, not to mention the surprise surgery and other illnesses we went through.
This past year, I thought we were being smart by budgeting $1,000. We’re usually pretty healthy, and this amount would cover our deductibles and some regular prescription medications. But once again, I didn’t use my crystal ball. I didn’t know last year that my son would require weeks of speech therapy, which quickly wiped out our account.
So now, it’s time for open enrollment again. I’m pretty sure my son will continue to need speech therapy, and we’ll also need to plan for all the usual health care needs.
My plan is to read over the materials carefully, and check out the calculators at Plan For Your Health and BlueCross of MN before my husband and I decide how much money to set aside for next year.
I’ll also do all that I can to take good care of myself and my family, so that we can stay as healthy as possible. I’ve learned now that there are no guarantees for what will happen with your health. So we’ll also make sure we have an emergency fund ready just in case.
What are your plans for open enrollment? Do you have an FSA? How much are you contributing?
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