Add Flexibility to Healthcare Savings

If you’re looking for a way to save on medical expenses, a flexible savings account (FSA) might be the way to go. Consider it before the year ends. An FSA allows you to save with specific tax advantages. Here are the pros and cons of using an FSA.

How Does an FSA Work?

First, how an FSA works: When your employer sets up an FSA, you can contribute a certain amount of your earnings before they’re taxed. That allows you to lower your taxable income. Your company can also contribute to your FSA. 

Benefits of an FSA

Now for the pros of an FSA:

Pros:

• Reimbursement for medical payments. Your pretax funds can be used to reimburse the costs of diagnoses, treatments, prevention methods, and more.
• Cover loved ones’ medical costs. If you own an FSA, you can use it to cover the medical costs of your spouses and dependents.
• Cover medical equipment. You can use your FSA to cover the cost of qualified medical equipment. 
• Reimbursement amounts for insurance deductibles. You can also use an FSA to reimburse for deductibles, which is the money you spend for health care services before your insurance begins to pay.

Downsides of an FSA

With any advantages, there are also some downsides to consider.

Cons:

• Lack of coverage. Not every medical cost is covered by an FSA. For example, you would not be able to use your FSA funds to cover any cosmetic surgeries. 
• Use it or lose it. In general, you must use your FSA funds within the plan year. If you don’t use the money, it’s gone. 
• Not eligible for premiums. While an FSA can cover insurance deductibles, it doesn’t cover insurance premiums. 

Do One Thing: Make sure you use your FSA each year to take full advantage of the plan.