Thrifty Thursday: Using Flexible Spending Accounts

I am not feeling particularly thrifty this month with quite a lot of my money going out the door to the dentist.  So this might be a little of a vent and a little bit of help to save a little money.  I started to write my vent before I even knew what my topic was going to be but it quickly formed.

I don't know if everyone has dental insurance but I couldn't live without out it... especially since I had my little guy.  My teeth started causing trouble as soon as I got pregnant.  I have been having so much dental work every I used up all my insurance every year since I gave birth.  There was a limit of $1,500 per person. 

With lots more dental work still to go, I put off a few of my crowns until this year to use the insurance money when it reset in January.  I was finally done with all the planned work and I was ready to celebrate.  A few days after the last appointment, I broke my molar!  REALLY!!!  I had no insurance left and that had to come straight out of my pocket.  I knew before I went to the dentist what he was going to say so I did all my crying the night before.  Especially since the day of the appointment was my birthday.  My birthday present from the dentist was a bill for over $1300. 

Anyway, enough complaining from me because as my husband pointed out, there really wasn't another choice.  I am now a proud new owner of a mouth full of crowns with the great hope that I don't need anything else this year because I maxed out my dental insurance and my flexible spending account (FSA). 

Have you ever used a flexible spending account?

I never used flexible spending before having a child and I really don't even know if it was available in my previous jobs.  If you have this opportunity available to you through your health insurance, make sure you use it.  It takes out pretax money from your pay check to put into a different flexible spending account for health care needs.  It will basically pay you back for co-pays, medicine, doctor visits, or my intense dental bills.  My cousin's job came with a credit card that pulled the money right out of the account but we have to get our Explanation of Benefits from the insurance company and submit them with a special form to the FSA company to receive a check in return.

How much money should I set aside?

I was afraid the first year to set aside too much money and not be able to get the money back out so we only did a little bit because the catch is that you have to use it all before the end of the calendar year.  It was adjustable when we added the extra member of our family so we go to change the amount to cover all of the medical bills associated with his birth.  We still used all the money by February (since my son was born in January and it took a little bit for the bills to come in).  I got a little more crazy the next year and raised the amount which I also used long before the end of the year.  We have added a little more each year based on the planning that we have done and we have always used it.

My best answer is to track your medical expenses this year and then you will have an idea for next year.  We usually pick at least a few co-pays to take the little one to the doctor and two dentist visits per year which is about $100.  Then, a few co-pays and medicine for the adults in the house which is another $200.  Add in the things that you think that you are doing for the year like my dental work (estimated at $1300) and glasses (estimated at $200 which will probably be put off until next year).  We added a little bit more for unexpected expenses because there are always some and picked our number.  Do you have a way to figure out your number?  If you haven't used it before, start small until you get comfortable with all the rules and add more money in later years when you have learned the ropes.

Do you know the difference between health care and child care?

The obvious answer is that they are for different things.  I thought that was the only difference when we started using them but it isn't.  Last year and this year, we did both types of accounts.  I didn't know there were different accounts before we actually started using them but I quickly learned.

We set aside money in the health flexible spending which can be used for health expenses at any time during the year even before the money is in the account.  In the case of this year, I submit all my dentist bills and I get a check back for the money immediately even though the money hasn't even been taken out of my husband's pay checks yet.  It is great because I end up using most of it at the beginning of the year and getting the money before I would see it in the pay check.

The child care flexible spending is a little different because you only get the money after the period is over (even if you pay at the beginning of the month).  I pay for my son's nursery school at the end of the previous month for the period of the next month.  When I submit the form to the FSA for processing, I don't get the money out until after the end of the month has passed.  In addition, I don't get it until the money is in the account.  If I paid the whole year up front, I wouldn't get the money until the period of performance was passed and their was money in the account.  Almost like a checking account because they can't write a check against the account with no money in it.

Important Note:

I don't have any financial training to tell you how this works out best for your financially and how things would be different if we didn't do it so please make sure to check with a financial specialist on how it will work for you and your family.  The money is taken out pre-taxed and then we get it back to put into our regular checking account as we spend it at the doctors office.  On our particular type of plan, we usually have to pay our bills first before we get the money so this doesn't help actually paying the bills but if you have the money in your account to pay them, this will quickly replace it. 

Do you use flexible spending?  Do you think that it saves your family money?  Do you have any tips?