If you make use of a FSA, then you need to be taking advantage of the benefits this type of account provides you with. For those who don’t know, a flexible spending account is an account that is set up by your employer and gets money deposited into it directly from your paycheck each pay period. The money is deposited into the FSA before taxes are taken out of it as well, so you will never have to worry about paying taxes on your FSA funds when making either deposits or withdrawals; however, the only thing you are able to use the funds in your FSA for is health care expenses. Copays, prescription drugs, glasses, prescribed dental care products, and many other things can be paid for with the funds from your FSA, but insurance premiums cannot be paid for.
What You Need to Know About Flexible Spending Accounts
If you don’t already have a FSA, then you might be wondering what all it covers and what the pros and cons of having one are. Here are some of the main things you want to know about before speaking to your employer in regards to starting a FSA:
- You can use your FSA to pay for the items your Miami eye doctor prescribes. For example, you can buy a batch of contacts or get new pairs of glasses using the money in your FSA.
- You can also use your FSA funds to pay for items from your dental care provider. You can even use it to pay for Invisalign or advanced treatments that aren’t normally covered by an insurance provider.
- The funds in your FSA do not roll over to the next year. If you have not used all of the funds in your FSA, then they will become useless when the new year starts. However, employers have the opportunity to offer one of two alternatives to their employees: they can either allow $500 to roll over to the new year, or they can give you a 2.5 month grace period at the beginning of the new year. These are optional for an employer, though, so you may want to speak with them about this before setting up your FSA.
- The money deposited into your FSA can be deducted from your overall salary when filing taxes. If you make $40K per year and deposit $2,500 into your FSA, then you can claim your total income as $37,500 and save some money on your taxes.
So, Are FSAs Worth it?
After learning about flexible spending accounts, you may be wondering if it’s worth it to sign up for one with your employer. Many people get worried when they hear that their money in the account will expire if they don’t use it before the end of the year. However, people who suffer from chronic illnesses or get sick frequently can definitely benefit from using a FSA account. They will be able to save money on their taxes and also on the items they need to get from their doctor in Miami Beach. If you are still unsure if a FSA is right for you or not, then speak to your employer and ask any questions you may still have.