For most people in their early- to mid-20s, this decade is a delicate balancing act between career advancement, financial stability and learning the valuable lessons that will serve you in the years to come. So it should come as no surprise that many of us can make questionable financial decisions when we’re young, especially when navigating the confusing world of health insurance benefits.
Your 20s are your first opportunity to truly begin to save for the future, and you should take advantage of every option afforded to you once you take that first job. When it comes time for open enrollment, a flexible spending account (FSA) is too good of an offer to pass up for first-time workers. Here are a few of the immediate benefits of choosing a health plan with an FSA option.
- Pay less in taxes
For 20-somethings who are just starting out and making an entry-level salary, the idea of reducing one’s take-home pay sounds like insanity, but it actually helps your bottom line in the long run. Say you set aside $500 for the year in your FSA and you earn $35,000 a year. Because there is less money for the government and state to tax, you can expect to save up to $135 in taxes over the course of the year. It’s not a ton, but when you’re pinching every penny in your 20s, that could make a huge difference!
- A healthcare rainy day fund
Ask any 20-something and he/she will tell you that they may have let a doctor’s appointment or the slide in the interest of finances. When enrolled in an FSA, your full year’s allocation is available from the first day of the plan year. Most benefits administrators will provide FSA debit cards for convenience. So whenever you need to pay a co-pay, purchase a prescription or visit a specialist, you’ll have the peace of mind that you’re not dipping directly into your bank account to cover it!
- FSA management is easier than ever before
You may have heard that FSAs can be a pain to manage, but recent regulations put forth by the IRS have made these accounts more accessible than ever. First, the vast majority of purchases are made with FSA debit cards, so it’s like having access to your own savings for health expenses when you need it most. While FSAs still function on a year-to-year basis, employers have the option of providing relief through the $500 rollover or 2.5 month grace period. Employers can choose one (or none) of these regulations, which allow FSA users to move up to $500 into the next plan year’s account, or the 2.5 month grace period that gives users 2.5 months after their plan year deadline to spend down their allocations.
If you choose to enroll in an FSA during your next open enrollment, be sure to spend your FSA funds at FSAstore.com! We have the web’s largest selection of FSA-eligible products to help you maximize the potential of your healthcare benefits.