It is insurance time soon. We have the option of a flexible spending account.
I wear glasses, and need new ones every year or so.
I take 2 thyroid meds because mine was removed. I have to take them. I take a couple of others as well.
I do not understand the FSA, and am not sure if I need one. I have about $100 USD in meds co-pays a month, and $25 co-pays for at least 8 doctor visits a year for blood work for the thyroid stuff.
My coworkers are better at adulting, and I do not want to ask around at work…
So do I need one, and how does it work? Thanks in advance.
In: 15
The ELI5 Version:
Ok, imagine every time you get paid $10, your boss first gives the US government $2 as your taxes and gives you $8. That $8 is called your “take home pay” and you can do whatever you want with it. Now the US government wants to let people save money on medical costs. So they allow your boss to put all $10 into a special spending account just for your health. As long as you use it for glasses, medication, and doctor visits you get all $10 instead of just $8. It’s a great deal. Health is expensive, so you are allowed to put up to $3050. But here is the catch, if you don’t lose it all, the money is given to your boss and they can do whatever they want with it.
Now for your specific case, you can ask your HR team if there is a rollover for the FSA plan. This is a common question and will make you look smart. A lot of companies have a rollover, which means up to $610 of funds go into the 2025 account for you. So you don’t lose everything left over.
If you have the option for an FSA it is a great deal. If you put in $1400 pre-tax for the expenses you know about, you are saving (tax bracket)*1400.
Latest Answers