by Joshua Edwards

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

Flexible Spending Accounts (FSA's) are non-refundable, and non-transferable. In other words, funds will not roll over to the next year, and if not used during the "Coverage Period" all money left in the account will be lost. Therefore, maintaining a Flexible Spending Account is essential to keeping a family budget on track without needlessly wasting your hard earned money.

Each year employers will give out a Flexible Spending Account enrollment opportunity (usually on January 1st) to their employees. Look over or start a family budget concentrate on possible medical expenses or dependent care (depending on the type of account you set up). Play the numbers, and if you have question about what all an FSA will cover or if you have an general questions about the federal rules and guidelines as defined by the IRS, read Publication 502 here www.irs.gov/publications/p502/index.html. Common medical coverage includes:

Fees paid to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and Christian Science practitioners Contact lenses and eyeglasses

Fees for hospital services, qualified long-term care services, accident and health, and qualified long-term care insurance premiums, nursing services, laboratory fees, prescription medicines and drugs, and insulin.

Acupuncture treatments

Inpatient treatment at a center for alcohol or drug addiction

Smoking-cessation programs and prescribed drugs to help nicotine withdrawal

False teeth, hearing aids, crutches, wheelchairs, and guide dogs for the blind or deaf

Fees in excess of reasonable and customary amounts allowed by your insurance

Cost of vasectomies, hysterectomies and birth control

Non-elective cosmetic surgery

Co-payments on covered expenses

Deductibles

Braces

Prescription drugs or prescription co-pays

Stay conservative in your figures. Although the money that goes into your Flexible Spending Account is tax free if the amount contributed is greater than the amount utilized you could waste more money than you saved from avoiding that tax.

Really management is just careful financial planning, and circumstantial intuition. For example: Karen has teeth like her mom, Jr. breaks something every other week in football, or that eye surgery you've been wanting to get is just too expensive. While doing this planning you may decide that an FSA isn't right for you this year, or that you just need to calculate your co-pays, and make it work for you there. Whether you are quiting smoking, getting new hearing aids, or having a baby put that Flexible Spending Account to work for you on your budget and you will be pleasantly surprised at the possibilities you have opened up for you and your family.

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