by Ken Locke

Created on: November 15, 2008   Last Updated: January 13, 2009

The recent development of a Flexible Spending Account allows many workers and employees to take advantage of what is basically a pre-tax health prediction payment plan. The essence of the FSA is that a person calculates his or her anticipated medical spending for the coming calendar year. This amount is then entered as the total balance for the FSA, at which time equal payments, according to the persons pay cycle, are computed. These equal payments are deducted once each pay period in order to amass the calculated amount by the last pay period of the calendar year.

The beauty of the Flexible Spending Account (FSA) is that the ENTIRE amount for the calendar year is immediately available to the FSA holder, even though hardly any money has been deducted to pay back the FSA. An FSA works especially well for 'big-ticket' medical expenditures (like orthodontic braces).

Consider using a credit card that gives reward points or miles back to you to make the full payment on the 'big-ticket' expenses, and then using the FSA to pay the credit card back to zero before any interest can accrue. You will often get a discount from your medical practitioner if you pay cash for the procedure or treatment, saving you even more money.

When calculating your calendar year's medical spending needs, be careful to include such prescriptions, vision appointments and supplies, and routine dental care. Allow a cushion to cover any unanticipated costs that could come up.

You can request reimbursement for medically-related expenses throughout the calendar year in question, and normally until the end of March of the following calendar year. This allows a lot of time for paperwork slow-downs or claims that need extra explanation from you to be approved. Many health care providers will automatically file the reimbursement paperwork for you. Those claims that you have to file yourself use a web-based claim form that you fax, along with proof of payment receipts, to the FSA agency.

Should you have a 'cheaper than expected' medical year, and have money left over in your FSA, you can purchase a wide variety of health and medical items that will qualify for reimbursement from your fund. There is a long list of examples on your FSA website (aspirin and band-aids qualify, for instance), and questions about qualifying items are easily submitted and readily answered by expert personnel.

By using a Flexible Spending Account, you will save worries over having enough money to pay medical bills, and your pre-tax dollars will buy more service per dollar as well. Stay healthy!

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