More belt tightening: Health care budgeting, FSA's etc

[TheLittleRoo]

I feel really dumb for asking this because I'm acknowledging that we don't participate in an FSA and we should... but

I just discovered I can save about $500/yr just by using the Rx by Mail option my insurance provides vs me refilling monthly at a local pharmacy.

Which got me thinking we really need to budget into an FSA, and then USE the money. So, what is covered in health savings plan? To be clear, I mean the kind that you put aside pre-tax money per year and HAVE to use it or the money goes *poof* at the end of the year?

How do you determine the amount to aim for? What can you spend it on at the end of the year if you see you have a big overage?

TIA! oh, and does anyone else have any other tips for saving in this area? Dental, medical, vision, Rx, etc?

eta: changed to FSA, not HSA

 

[Fizzgig]

I found this for another thread today, so here's what you can spend the money on in your HSA: http://www.irs.gov/pub/irs-pdf/p502.pdf

Any way you can combine a Flexible Spending Healthcare Account AND a HSA? Or do you have that option? The flexible spending uses pre-tax dollars and you have to use it all by the end of the year or the money goes poof. A healthcare Savings Account accumulates year to year.

Hope that helps!

 

[kfeuer]

When we first started our FSA, we sat down and figured out how much we were spending on just routine medical care co-pays and prescriptions. We padded it a little and had no problem using it up.

This year, we put aside $1800 and it's already spent The sad thing is, we haven't even had major surgery or anything. DH is diabetic and on some meds that don't have generics, which really adds up. One of our boys needed dental work that cost $400 after insurance paid. DH and I have both had 2 bouts of pneumonia this year (each bout cost a couple hundred dollars between office visits and meds). Here's to hoping we stay healthy the rest of this year!

 

[Fizzgig]

TheLittleRoo, don't worry at all about mixing up HSA and FSA... The IRS mixes the terms, too, which makes it annoying to try and track down specifics. The link I gave you works for both HSAs and flexible spending expenditures.

Any way you can check into using a HSA at work? Usually, that means lower out of your pocket, but they also give me the willies. You pay for everything before your insurance kicks in at some set amount.

 

[pumpkinfish]

This is the first year I've used my Flex Spending Account. For $21 a paycheck I have about $550 to use. Well I tried it out last month on my prescription and it's really easy! Good thing I have it because my insurance changed and now my Humira has to be done through the mail/delivery due to being a "specialty" drug and it's $400 for a 3 month supply (6 injections)!! I was so sick to my stomach. On the other insurance plan I was paying $60 for one month...which would have been $180. The budget was NOT expecting that! The FSA came in handy and I paid using that. I'll have to plan ahead for 3 months when another $400 is due...but at least I can try and budget that out now since I only have about $60 left in the FSA.

I think FSA's are wonderful IF you know you will be using that money up for mandatory drugs or surgeries, ect. I know next year I will be increasing the amount out of my paycheck to $50. That will really help.

 

[TheLittleRoo]

I'm so con-fooozed!!!

What is the difference between an FSA and an HSA? I know DH has access to the FSA, which I think is the one that is set aside per paycheck in pre-tax dollars and you submit against it for reimbursement of approved medical expenses.

I seriously doubt we would ever reach the 7.5% of gross income in medical expenses in order to write them off as a deduction. God forbid. So, I'm not looking to itemize medical in my 1040A.

If we hit the nail on the head budgeting in our FSA, would we need an HSA? Why is one better than another? Does the federal govt have both (DH works for Fed Govt)?

Thanks for the tutorial!

 

[Melynny]

Just an FYI on using the mail order prescriptions, Make sure that you have the Dr. write the prescription for a 90 day supply and check refills. It will make the whole thing easier. Our insurance uses the Walgreen's mail order and that is what they requested. We used the fax form from the internet and had the Dr fax it from his office, ( that's the only way they will accpet it.) You can still mail in the originals. Good luck we are still working out all the Kinks...

 

[Chicago526]

I just budget what I know we'll spend. We spend about $125 a month on DH just for his prescriptions (after insurance! ) so I just multiply that by 12 and that's what we set asside.

 

[Maggie'sMom]

A HSA is meant to be used in conjunction with a high deductible major medical policy. You put money in pre-tax and it will cover routine care and smaller medical care. The major medical policy will pick up in case of a large medical expense, i.e. hospital stay, surgery, etc.

A FSA is used when you have a more traditional health insurance plan. You set aside pre-tax money and it will cover office visit copays, deductibles, prescription meds, vision care (including glasses, contacts, and contact lens solutions).

A couple important things to note on the FSA: You can request reimbursement for a medical expense before the money is contributed. For example, if you elect $1200 to be paid in per year (i.e. $100/month) and you have a $500 expense in January, you can submit that and be reimbursed immediately. You don't have to wait until you have $500 accumulated in the account. And if you leave your job before the $500 is accumulated, you don't have to reimburse it either. Of course, the drawback is if you contribute money and don't use it by year end, it does go "poof".

Some companies are now allowing an extended grace period for using the contributions. This was allowed by the IRS a couple years ago. For example, I have until March 31, 2009 to incur expenses on my 2008 FSA money and I have until May 31, 2009 to submit the expenses for reimbursement. That way if I don't use up my money before year end, I can still use it into the first quarter of the next year. Not all companies allow this so check with yours first.

 

[Fizzgig]

I'm so con-fooozed!!!

What is the difference between an FSA and an HSA? I know DH has access to the FSA, which I think is the one that is set aside per paycheck in pre-tax dollars and you submit against it for reimbursement of approved medical expenses.

I seriously doubt we would ever reach the 7.5% of gross income in medical expenses in order to write them off as a deduction. God forbid. So, I'm not looking to itemize medical in my 1040A.

If we hit the nail on the head budgeting in our FSA, would we need an HSA? Why is one better than another? Does the federal govt have both (DH works for Fed Govt)?

Thanks for the tutorial!

Flexible Spending accounts help pay for expenses, but don't work as health insurance. You pay into them via a paycheck, and use pre-tax dollars. If you don't use everything in a year, the money goes poof.

Healthcare Savings Accounts accrue from year to year and are used to pay for healthcare expenses such as hospitalizations. You can invest the money after it reaches a certain point. The 2008 limit for contributions is $2900 for individuals and $5800 for families. As I read up to reply to you, I see that my company will not allow me to enroll in both a flexible spending and a healthcare savings account. Well, that answers that!

HSAs are also combined with high deductible healthcare program (HDHP). This conbination is used by companies to get a handle on the company's healthcare expenses. They will give you X amount of money for your HSA, or you can set aside X amount of money pre-tax in your HSA (depending on the company) to use for doctor's visits, etc. The company will only start paying any expense after a certain amount has been reached (such as $10,000). The employee usually has lower premiums in exchange.

I'm trying to emphasize the "saving" versus "spending" to help you track which one is which. Hope this helps!

 

[familyfirsttimer]

Just wanted to add the a lot of OTC things that would never be covered a a"medical" expense, are eligible under FSA (of course check your individual plan for details) These items(for our plan) include contact solution, bandaids, neosporin as well as Tylenol etc. When we got to Dec 1st had had @$400 left, we just stocked up on those items(check you expiration dates)

So to budget, just think about what you normally spend in co-pay and Rx's and estimate the other things like dental, glasses, OTC meds, etc.
It has been totally worth it for us! Good luck

 

[Maggie'sMom]

Just wanted to add the a lot of OTC things that would never be covered a a"medical" expense, are eligible under FSA (of course check your individual plan for details) These items(for our plan) include contact solution, bandaids, neosporin as well as Tylenol etc. When we got to Dec 1st had had @$400 left, we just stocked up on those items(check you expiration dates)

I'm pretty sure the list of what's eligible is determined by the IRS, not an individual company. But you are right that first aid items, OTC medications (but NOT vitamins), and contact solutions are covered.

 

[LuvSW]

The Health Savings accounts are not nearly as daunting as they might sound. I have one, and I LOVE it!!

We have a $2250 annual deductible, and it's a FAMILY deductible, so the medical expenses, including prescriptions, count toward that deductible. Our Out of Pocket maximum is $4000. Once we've paid $4000 for the year, our insurance company pays everything else. We also get our routine wellness physicals covered at 80% BEFORE the deductible.

Fortunately, other than needing Lipitor for DH cholesterol, we're healthy. My family of 3 pays $242/month for this plan. So we put the extra savings into the Health Savings Account at a local bank, we get to deduct $4000 a year ABOVE the LINE on our taxes PLUS because we're both self employed, we get to deduct the Premium.

What we put into the ACCOUNT is then used to pay for prescriptions, contact lenses, dental appts, etc. Again, it's regulated by IRS. BUT it is not a use it or lose it, it will roll over each year until we're 65 and can take it out.

Everyone's plan is different, but I bet if you look closely, your deductibles and/or out-of-pocket annual maximums are higher than you think. The Out-Of-Pocket Max is actually more important to understand than the deductible, because that's the true indicator of YOUR annual responsibility.

YOU SHOULD LOOK INTO the Health Savings accounts - the deductibles are NOT as high as you might think!! It works for us, but they aren't for everyone.

Here's a link to some of the govt info - kind of a Basics of HSAs

http://www.ustreas.gov/offices/public-affairs/hsa/pdf/HSA-Tri-fold-english-07.pdf

http://www.treas.gov/offices/public-affairs/hsa/

 

[Rigel Kent]

How do you determine the amount to aim for? What can you spend it on at the end of the year if you see you have a big overage?

To determine the amount to aim for, I spend about 2 hours one evening in November looking carefully at the previous year's expenses, first by "topic" (e.g., medical doctor, prescriptions, dental, eyes) and then within each topic, by person. Then I estimate what it will be next year.

We always put off some "semi-optional" expenses until the end of the year, and then decide if we want should spend it this year or put it off until the next year. Examples: eye exam, glasses, routine physical. I guess those examples aren't truly optional, but it is optional whether we do it in October/November or January/February. One thing to watch out for is not to count on making appointments in late December, when the doctor will be.....at Walt Disney World!

 

[tar heel]

The best part of our FSA, other than that we don't pay taxes on the $, is that the $ is there from day 1. We put $3,000 (the max our company allows) and the entire amount is available to us on January 1.

We've never had any trouble using the money since we have co-payments for everything, three of us wear glasses, etc. We also have until the end of March of the following year to use the money. If we did NEED to spend some, we would order an extra pair of glasses or sunglasses or have one of the dental crowns on my list done.

Saving tips: Set up an FSA -- we save several hundred dollars by not paying federal or state taxes on that $3,000. Use the mail order pharmacy and coupons if you have to get one filled locally. If you wear contacts, call around and price them -- the range I got for my son's was $97 to $200, and that $97 was a few dollars less than the cheapest internet place.

 

[Gymbomom]

Biggest plus is it is available at the first of the year. We plan on putting a big chunk down on our dd's braces.

 

[Jaklackus]

When we first started our FSA, we sat down and figured out how much we were spending on just routine medical care co-pays and prescriptions. We padded it a little and had no problem using it up.

LOL I have never done this before but decided that I could count on spending a few hundred on co-pays between doctor and dentist visits if not more...so I thought I would pad it with another $200 thinking I would just go on a shopping spree at CVS(bandaids, kleenex, advil, etc)they list how much qualifies for FSA at the bottom of the receipt) if we came up short....now I wish I planned on more of DH's dental work....all of the $500 I thought would carry through the year is long gone....and the company that handles it for my company deposited the money in my checking account in less than 48 hours of me faxing my receipt copies in....

 

[CajunDixie]

I haven't seen this mentioned yet. We have an HSA and use a Mastercard to pay for medical items from the account. The last time I took DS to the Dr. the receptionist asked about insurance updates. I told her we have an HSA and would be paying in full that day. When I went to pay she gave me a cash discount since no one had to file an actual insurance claim. Soooo if you are paying for something yourself and don't need it actually filed with your insurance company then ask if they give cash discounts.
And before DHs insurance kicked in his employer agreed to cover major medical expenses and agreed to pay for DHs hernia surgery. The surgeon would have charged us $12,000 but since we would be walking in with a check in hand only charged less than $5,000! So always ask if there is a cash discount!!

 

[marypoppinswannabe]

I have done the FSA for the last 4 years and have never lost any money because I did not use it.

My recommendation would be to do a lower dollar amount the first year you do it. The first year I did it, I only did 600.00 because I was not sure if I would use it all. I have upped it every year and still have used it all. This year I did 1200.00 and have already gotten re-imbursed for all of it.

 

[powellrj]

we have done fsa for many years. The first year they offered it, our benefits person recommended that we save the receipts until the end of the year and turn it in at one time and you have your Christmas money. We have done it before and it works great. At one time we used mine for Christmas and DHs for vacation.

Now we seem to need it to pay for the larger deductibles we have.