Friday, October 21, 2011

Flexible Spending Plans (FSA) - if you have one, did you use it less this year?

I was cruising the WSJ online and found a Smart Money article about FSAs being less flexible (and will be more rigid in the years to come).

We have used a FSA for the past several years to help offset the costs of care.  What attracted us a few years ago was being able to save a little on our tax burden by using one -- who doesn't want to save a few hundred bucks a year?  At that time, I was receiving allergy shots all the time at about $30 a copay.  Going once a week meant $120 in copays a month and once we added on the cost of allergy meds and everyone else's medical/dental needs, it actually made a lot of financial sense.  Even more so since OTC drugs were included at that time, though for this year, they were not unless you burdened yourself (copay) by visiting your doctor to get a prescription for them.  Granted, if you were sick and they prescribed an OTC medicine for you, that's different than having chronic pain that you use OTC pain relievers for versus opting for pricier brand name analgesics that actually would be eligible for reimbursement. 

The ability to plan for health care needs has basically been stripped from us.  We seriously cut back on how much to sock away and we never maxed out on the total amount you could defer.  What saddens me is that costs just keep going up.  Over the past few years, I've noticed higher premiums and an edging down on covered services and higher copays too. 

But even more than that, our FSA provides a valuable service in that once we are signed up for it, we can file (or they automatically process) claims, even if we haven't contributed that money to the account just yet.  Case in point:  My hubby had a root canal early in the year because a silver filling cracked.  The upfront cost of the root canal and crown was a lot to bear after Christmas.  However, the claim was filed and the dentists paid.  We are still "paying" it off via FSA contributions each pay period since that event pretty much maxed out the money we did sign up to have set aside in a FSA.

Lowering the cap next year will hurt a lot of people by shifting more tax burden on them at a time that their premiums are likely going to continue to rise.
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