Is it possible to obtain a Flexible Medical Spending account (FSA) if your employer does not offer it?

July 8, 2008 9:41 AM

I am considering taking a new job offer, however the new employer does not have a Flexible Medical Spending account (FSA) option. My current employer has this option and my family and I make extensive use of it. We have a lot of co-pays and other medical expenses such that the FSA account really saves us money. Can one sign-up for an FSA account outside their employer? If your employer does not offer the FSA option are you out of luck? Thank you.
posted by DerekTheGeek to Work & Money (6 answers total)

Based on what I know about Flexible Spending Accounts, they have to be employer sponsored because 1) the money has to be deposited pre-tax, and 2) they are pre-funded by the employer at the beginning of the year.

On the bright side, my understanding is that items you would normally pay for with your FSA are tax-deductible. I know it's not the same as having the pre-tax money all year, but it helps.
posted by thejanna at 10:26 AM on July 8, 2008

thejanna, from the link in your comment:

You may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income. You do this calculation on Form 1040 Schedule A in computing the amount deductible.

Just as an FYI for anyone, it's pretty rare for the medical deduction to come into play for the average person/family.
posted by peep at 10:34 AM on July 8, 2008

I am a big fan of the FSA too, and would be very upset if I was going somewhere that didn't offer it. As peep mentions, unless you have catastrophic medical bills, the deduction isn't going to help you.

Self-employed individuals can have a health savings account, but the benefits differ by state.
See http://www.freelancersunion.org/resources/hsa.html as an example for the New York one. I don't know what the rules are for those who are unemployed but do not have a FSA. Perhaps a starting point for your research.
posted by micawber at 12:45 PM on July 8, 2008

My local credit union does offer Healthcare Savings Accounts and according to the signs in the lobby they do have some sort of tax break, but I'm not sure what kind.

Have you tried asking your local bank or credit union?
posted by anastasiav at 1:16 PM on July 8, 2008

Response by poster: Thank you very much for the suggestions. As was mentioned by others I would not benefit from itemizing as the standard deduction works out better for my family. I will look more in to an HSA as mentioned by "micawber". A U.S. Treasury site "http://www.treas.gov/offices/public-affairs/hsa/faq_contributing.shtml#hsa1" mentions HSA as providing an "above-the-line” deduction. I wonder if this deduction can be used in addition to the standard deduction? Any solution I find I will post here.
posted by DerekTheGeek at 1:21 PM on July 8, 2008

I believe that HSA accounts are designed to be used with very high deductible health insurance plans (like $1000+) whereas FSA is set up your employer and works with any health insurance option.
posted by metahawk at 3:49 PM on July 8, 2008