How To Get, Use, Manage, And Claim A Medical Flexible Spending Account

The IRS has allowed Americans the opportunity of setting money aside, on a pre-tax basis, to help in paying for medical expenses and other medically related items with flexible spending accounts, commonly known as an FSA.This affords members a tremendous opportunity to save money in taxes as this will reduce your taxable income.The key to making these accounts work in your favor is careful planning. Many experts will recommend looking at your medical expenses from the prior year, and calculate 20% to 30% less as a starting point.The main reason in planning conservatively is due to the "use it or lose it" provision in these plans.Any unused funds remaining at the end of the plan year is forfeited in accordance with IRS guidelines.Eligible expenses would include office visit co-payments to your doctors, prescription drug co-payments, insurance plan deductibles and coinsurance.Other eligible charges include payments for dental services including services that some dental plans do not cover, like orthodontic services.Recently, the IRS has allowed the cost of over-the-counter medications to be applied to an FSA as well.Therefore, such items as aspirins, pain relievers, allergy medications and certain supplies are eligible for reimbursement from an FSA.One can also get the cost of eyeglasses and hearing aids and examinations reimbursed also.Certain surgical procedures are also reimbursable from an FSA.One very good example is laser eye surgery, or Lasik surgery.Most insurance plans will not cover the cost of this procedure.However if you were interested in getting this done you could pay for the service with pre-tax dollars.

Here's how it works. Let's assume you decide to set aside $2000 into an FSA.Assuming you are paid weekly from your place of employment there would be a pre-tax deduction of $38.46 every week and put into the FSA account.When you visit a doctor for an office visit you would pay the doctor's office visit co-pay.Then you would be given a receipt for payment.You will need this receipt to submit for reimbursement from your FSA.Generally there is a simple one-page claim form that you fill out and submit along with the receipt. The same holds true if you go to a pharmacy to purchase your prescription drugs or other over the counter medications.

One great benefit about a medical flexible spending account is that you can apply for reimbursement from the account without it being fully funded.For instance we stated earlier that the laser eye surgery is a reimbursable expense.The cost of the procedure usually runs between $2,000 and $4000.If your plan year runs from January 1 to December 31 then your weekly payments would commence with your first paycheck in January.You could go and have the surgery done in January, pay for your procedure with a major credit card and get a receipt from your surgeon's office. Then you would file a claim through your FSA and receive a check for the full amount of the surgery, even though you have not fully funded the account.In essence this would become an interest free loan.

It's not often that the government tries to help Americans save money.So if given the opportunity to enroll into an FSA you should take full advantage of it.