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Thread: Optimal Use of an FSA?

  1. Team Rocket
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    #1

    Optimal Use of an FSA?

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    I have an FSA (flexible spending account) for healthcare related costs. I'm really not sure how to use it optimally though! Right now I deposit $400/year into it and then use it for co-pays (if I remember...) But my actual medical expenses are significantly more than $400/year so I'm wondering if it would be advantageous to put more money into it and use it more often? Does anyone have any ideas? I'm really unsure if there's a benefit to having the money come out of the FSA account rather than my normal checking...
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    Yes. It comes out of your check pre-tax. So it's like earning all that money tax free.
    to deduct medical expenses normally, you can only deduct any expense over 10% of your adjusted gross income. Most people don't.
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  3. Team Rocket
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    Quote Originally Posted by Guynavywife View Post
    Yes. It comes out of your check pre-tax. So it's like earning all that money tax free.
    to deduct medical expenses normally, you can only deduct any expense over 10% of your adjusted gross income. Most people don't.
    ohhhhhhhhhhh. You're right, I forgot about the tax part!!
    I added up all of DH and my medical expenses for 2014 in the hopes we could deduct but it was only like 8.2% of our AGI.
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  4. Wine-o
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    #4
    The thing to keep in mind with FSAs is that in most cases if you don't use it within the calendar year, you lose the money (it doesn't roll over). I've had friends that have had to make a mad dash for any approved OTC pharmacy items at the end of the year because otherwise it would just be throwing money in the trash. So if you do up your contribution, just don't put a crazy amount in there that you won't use. HSAs on the contrary DO roll over and they actually stay with you for life. I still have my HSA from my previous company and also a new one with my current company. I'm not contributing to the old one anymore but I have a balance that I'm using up before I even start using my current HSA.
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