Medical Flexible Spending Accounts (FSA’s) are a great way to save money on your out of pocket medical expenses. By budgeting your expected expenses for the coming year and using your employer sponsored FSA plan, you can literally save hundreds of dollars in taxes.
It is important to remember that medical expenses must be within the FSA plan year. This means that you can only use qualified expenses occurring in the same year as the FSA. If the plan year runs from Jan 1, 2016 through December 31, 2016, then the medical expense must occur during January 1, 2016 through December 31, 2016. If you see a dentist on December 29, 2015 you can not use 2016 FSA money to pay that bill, even if you pay it in January 2016. To use their Flexible Spending Accounts most advantageously, people often make medical appointments or purchase medical supplies and contact lenses etc in late autumn to use any money remaining in their FSA accounts. Conversely, others choose to wait until January when the new plan year starts if they have no funds left in their Flexible Spending Account.
IRS regulations may allow employers to permit an additional 2 1/2 month grace period or allow employees to carry $500 into the next plan year. Check with your employer to see if their plan has one of these options.
Remember: although Flexible Spending Accounts are excellent tools for your financial health, they should not dictate your medical health. Follow the directives of your health care providers for necessary appointments, prescriptions, tests etc -Money Mommy
Depending on your FSA plan, you may need to submit your medical bills to the FSA provider for reimbursement. Or you may receive a prepaid credit card for your qualified medical expenses. Or you may put an app on your phone to request reimbursement for qualifying expenses. I have had experience with all three methods.
Medical bills can be submitted by mail, fax or email. Simply fill out the necessary form provided by your employer, gather the bills – copying or scanning as necessary – and send them off. Don’t forget to request payment for medical mileage. Payment will be received in a few weeks.
Using a prepaid credit card is the epitome of ease at the doctor’s office or pharmacy. With a simple swipe of the card, medical bills are paid directly to the health care providers from your FSA account. Be aware that FSA providers often require a copy of the bill to substantiate medical expenses. If the required bills are not submitted in a timely manner, your FSA card may be suspended until such proof is received.
Putting an app on your phone is a third option. Many FSA providers have apps that allow you to submit medical bills by taking pictures of them. Within a few days, your reimbursement for your qualified out-of-pocket expenditures and medical mileage will be deposited directly into your back account. Unlike the prepaid credit card, you will not need to substantiate medical expenses at a later date since you have already submitted a picture of your medical receipts with your request.
Whatever method you choose for reimbursement, don’t put off starting your own Flexible Spending Account. You can literally save hundreds of dollars in taxes.