Worried about increasing health care costs? What if you could save on health care spending throughout the year? With a Flexible Spending Account (FSA), you can do exactly that! Through an FSA, you set aside pre-tax money to cover certain health care expenses, which can in turn reduce your out-of-pocket medical expenses, and save money on medications and medical supplies. Using an FSA results in your taxable income decreasing and your spendable income increasing – allowing you to save up to 40% on FSA eligible expenses.
You sign up for an FSA during an annual open enrollment period once a year. Open enrollment takes place at the beginning of new plan years typically from mid-November to mid-December, but it varies per plan. Open enrollment is the time in which FSA participants make benefit elections for the next plan year. It often coincides with signing up for health insurance.
It’s important to remember that it is generally only during open enrollment that you can make elections for the upcoming year. However, there are exceptions and you can make changes (if your plan administrator allows changes) if they result from a qualified event. A qualified event is a specific event that impacts your health care coverage. A marriage, the birth of a new child, and even loss of employment, are examples of qualifying events. You must notify your plan administrator of any qualifying events.
Spending on Your FSA
Earlier this summer, AFLAC released a Workforces Report finding that employees often waste money because they simply aren’t aware of available benefit options. Almost 90% of consumers said they choose the same benefits every year. For those consumers with Flexible Spending Accounts, only 16% contribute the right yearly amount.
Before you opt into an FSA, make sure to carefully estimate your health care spending. If you’re unsure how much to contribute to your FSA, our FSAstore Calculator can help you figure out yearly spending.