How to Choose the Right Amount for Your FSA
With the price of health care on the rise, many are taking advantage of the pre-tax paycheck deductions that come with enrolling in the Flexible Spending Account (FSA). Employees will save 25-40% in taxes for every dollar they elect, helping stretch their dollars when it comes to paying for their health care costs.
Many participants want to know…“What is the right amount to put in my FSA?”
The Flexible Spending Account (FSA) is an employer-sponsored health benefit that allows employees to set aside money, on a pre-tax basis to pay for qualified health care expenses.
The BASE® FSA can help employees pay for their out-of-pocket health care spending not covered under an insurance plan and cutting payroll taxes by decreasing the total taxable payroll. Employees now have extra funds to pay for the planned, and unplanned, health care expenses throughout the plan year.
Regardless of how the FSA is designed by the employer – carryover, grace period, or “use it or lose it” – employees must carefully decide the right amount to contribute to their FSA each year.
As we know, it is impossible to know what the year will be like for anyone’s health, but instead encourage participants to aim for a reasonable estimate. One place to start is to review last year’s health care, dental, and vision expenses and what is expected to spend for this year. As a reminder, don’t forget to include copays, urgent care or ER visits, prescriptions, and any planned surgeries or procedures. But also prepare for:
- Dental costs – will anyone need any orthodontic work this year?
- Vision expenses – will anyone need new glasses or contacts for the year?
- Physical therapy or ER visits – have kids signed up for all the sports activities this year that might result in a few injuries?
It is easy to track your yearly out-of-pocket expenses, but the hard part is estimating emergencies and unexpected costs. But know that if year-end is coming up fast and you have a lot of FSA funds left, check out the Optum Store to buy your FSA-eligible essentials!
For more information on the BASE® Flexible Spending Account (FSA), contact BASE® at 888.386.9680 or visit www.BASEonline.com.
Share on Facebook
Share on Twitter
Share on LinkedIn