How much should I put in my medical Flexible Spending Account?

November 24, 2008 3:35 PM

How much should I put in my medical Flexible Spending Account for next year?

I am in the 25 percent marginal tax bracket. The minimum is $240 for the year.

If I put $240 in and I spend at least $192, then I have broken even. Given that I have a $200 deductible on my medical insurance, that seems likely, as that is less than the cost of two visits to a general practitioner, or one visit to a specialist. On the other hand, now that I live in a country where I have to pay to visit the doctor, maybe I won't be assured of a couple of visits beyond an annual physical (free).

I don't have any expenses that I can definitely expect, such as ongoing drug prescriptions. Searching through previous AskMes reveals a wealth of things I could spend the money on rather than waste it. I've never done this before so I would welcome your thoughts.

posted by grouse to Work & Money (6 answers total)

Do you wear glasses? It helps cover the gap between whatever vision coverage you have and what a pair of glasses actually costs. You can also use it to buy non-prescription medication and misc. medical things like bandages.

IRS Publication 502 describes in detail what allowances are allowable. If you can find something in there that you're going to do, contribute.

The real question is, do you have any major predictable medical expenses next year in that list? If not, the answer is really $0. In my case my dental plan covers 50% of orthodontics and kid #2 is going in for braces so I'm putting in a bunch of money. But otherwise it's probably not worth the hassle unless you have something specific in mind.

Some ideas for optional medical stuff from good ol' 502: glasses, eye surgery, psychoanalysis, non-insured dental work that's not teeth whitening.
posted by GuyZero at 3:50 PM on November 24, 2008

grouse, a lot of FSA's also cover OTC medications, first aid kits, even sunscreen. Check your FSA's list of eligible expenses to get a better idea of what is covered. You should be able to at least cover $240 for the year.
posted by mogget at 3:50 PM on November 24, 2008

Response by poster: This is what is eligible in my plan. Yes, OTC meds are covered.

I don't have any major expenses planned, like glasses or orthodontics. I might see a physical therapist a few times.
posted by grouse at 3:58 PM on November 24, 2008

FASs are not like insurance - all FSAs cover the same set of stuff that's dictated by the IRS. They don't get to decided what they will and won't cover like insurance providers. It's a tax shelter for a specific category of expenses. It's not really en employment benefit per se - it costs your employer nothing but it gets administered via payroll because that's how the IRS wants it implemented. It should just be a tax deduction, but that would be too simple. :)
posted by GuyZero at 4:12 PM on November 24, 2008

Mr Allstar and I always choose to do what our deductible for the year is. Even if we don't use it for Dr appointments, we use it up with prescriptions, dentist, eye doctor and glasses.
posted by All.star at 4:38 PM on November 24, 2008 [1 favorite]

I put enough in my FSA to cover my recurring pharmacy expenses plus 2 doctor's office copays, because experience tells me that's about how often I will go to the doctor every year. Every year that I've had it (I'm now in my fourth year), it hasn't quite covered all of my medical expenses for the year, which is the way I prefer it. I'd rather buy some things out-of-pocket at the end of the year than worry about whether I will be able to spend it all. The tax benefit for me is noticeable--since I started using my FSA, I get a small refund check instead of owing a small amount in April.

My advice to you is to sit down and estimate all of your eligible expenses for the next year, and round down slightly.
posted by donajo at 4:46 PM on November 24, 2008 [1 favorite]