Reduce Arthritis Expenses With Flexible Spending Accounts
Learn how pre-tax dollars can help to reduce your annual medical bills.
Flexible spending accounts (FSAs), which allow an employee to deduct a specific amount each paycheck, help to defray medical costs and thus are particularly helpful for those coping with a serious diagnosis like arthritis. You can deduct up to $2,500 from your annual salary to pay for eligible medical expenses such as medical and dental co-pays, lab fees, vision exams, prescription medications, as well as over-the-counter medicines with a doctor's prescription. Only reimbursements for insulin are allowed without a prescription. FSAs may also be used to cover costs of medical equipment, such as crutches. However, you can’t spend FSA funds on insurance premiums.
According to benefits administrator Ceridian Corp., health flexible spending accounts, or FSAs, can save users an average of 30 percent annually. Even so, employees are understandably cautious about how much they deduct from their paycheck. The challenge is judging how much you should deduct because FSAs have a “use or lose” policy at year’s end. But some employers offer a grace period of up to 2 ½ extra months to use the money in your FSA or allow you to carry over up to $500 per year to use in the following year.
For those who can afford to deduct money, the savings can be vital, says Marty Rosen, executive vice president and co-founder of Health Advocate Inc., an employer-provided service that assists employees in navigating insurance and other health-related issues. “Especially for someone with a chronic illness, it’s almost a no-brainer,” Rosen says regarding the accounts. “It would be almost like burning money if you didn’t do it.”
Make sure to keep track of payments and receipts because you’ll need to submit them in order to get reimbursed. If you plan to take a medical tax deduction on the expense charge, you can’t use flex dollars to pay for it. IRS Publication 969 provides a comprehensive list of medical expenses eligible for flexible spending accounts.
Keeping up with your medical expenses – particularly those for OTC medications – to submit for reimbursement for reimbursement requires organization and paperwork for the doctor and patient alike, says Rosen, who also co-authored The Healthcare Survival Guide. One step patients can take is to ask their physicians to write a year’s worth of prescriptions in advance for OTC medications.
Patients also might want to take a second look at prescription alternatives, he says. Sometimes a similar medication, prescribed through a mail-order plan, might be cheaper than its OTC cousin anyway.
Some patients may benefit from divvying up medical expenses between a health savings account and a flexible spending account, if both are offered through their employer, Rosen says. A health spending account, which is paired with a high-deductible health care plan, can be used for medical costs. And the $2,500 limit of the FSA can be reserved for dental and vision costs, when the requisite type, called a “limited purpose FSA,” is available, he says.