I am currently filling out paperwork for a new job that I will be starting soon. I just went through and chose all of my healthcare plans and its looks like ill be paying nothing out of pocket each month for premiums. These plans also are $0 deductible or just like $100 deductibles. With this I was wondering if it would even be worth it to open an FSA and put money into it if I often will never pay a deductible or will be done with my deductible after one or two visits. Any advice is appreciated.
FSAs are great for dental and vision expenses. Do you wear contacts or glasses? They can be used for all types of over the counter items like cold medicine, Tylenol and even feminine hygiene products. The key is you have to accurately predict your expenses and not leave any $$ in the account at the end of the year. I have fixed medical expenses every year and I am able to max out my FSA, but it requires careful record keeping.
Electing an FSA is all about predicting your expected medical costs. If you don’t expect any medical costs even in a worst case scenario, you probably don’t need an FSA.
With that being said, we don’t know enough about your plan. It’s not just about the deductibles, you also want to look into the out of pocket maximums, coinsurance & copays. Also, do you wear glasses and have vision insurance? What about dental? FSAs also cover those costs.
You can use an FSA on a lot of things you may or may not buy regularly throughout the year.
Things like Tylenol, tampons, and bandaid. You should look up a list of FSA eligible items and see if you use any of them regularly.
It is up to you if you purchase these things enough to participate in the FSA and save a small percentage.
FSA money is pre tax, and you don’t need to elect a large sum into your account. You can always use these for office visits, prescriptions, and approved OTC meds. Even if your company provides a great plan, it still doesn’t hurt to have a FSA account to pay that deductible in the case of using the emergency room or need of surgery.
Plus at the end of the year you will need to use your balance at the FSA Store – which you can buy all of your household meds and other approved products.
*edit* wording
Here is something else to consider. If I had the option to have a High Deductible Health Plan (HDHP) years ago, I would have taken it. With these plans, you can put up to $7,300 (family) tax free into a health savings account. I pay cash for all my medical deductibles and expenses and let this account grow now. This can be used for a year with unexpected high expenses or it can be withdrawn at any time if you have medical expenses. I complained when we got the HDHP, but now regret not having it sooner. Of course, that means you have a $5,000 or higher deductible to meet, but if you don’t have many expenses, you an build up a huge cushion!
FSA is great. you get a ‘discount’ equal to your tax rate on medical care. FSA can be used for things like eyeglasses/contacts, office visits, prescriptions, dental care (from cleanings up to root canals and crowns or braces), etc.
For me an FSA has been more of a hassle than the tax benefits it provides. Unless you have some procedure planned I would skip it. The risk of losing the funds outweighs the tax benefits. HSA is a different story and well worth it
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