Frugal Tip: Use That Flexible Spending Account
For those of you who work for employers who offer Flexible Spending Accounts (FSA), be sure to turn on that option when it comes time to re-enroll into your company’s medical plan. Flexible Spending Accounts let you contribute pre-tax dollars from your paycheck that can then be used on medical needs tax-free. That means you can save an automatic 25% (or whatever you marginal tax bracket is) on your medical supplies just for taking part! The list of eligible products and services is pretty large, covers practically everything (except cosmetic procedures and such) medical from over the counter pain medication to contact lenses to contact lens solution. It’s the quickest way to slice an easy 25% off your medical.
The FSA doesn’t come without cost though. It’s a “use it or lose it” account, meaning if you don’t exhaust your balance during the year then the funds don’t roll over and they are gone forever (so plan ahead and plan accurately!). There is another side to the coin though, you can use up your account prior to fully contributing to it. For example, if let’s say you elect to contribute $50 a month to your FSA for 2008. In January, you’ll have contributed only $50 to your account but you’ll be allowed to use up the entire year’s $600 allocation.
If you’re like me, your company re-enrollment period is this week, so be sure to sign up!