Anyone who's tried to create and stick to a budget will tell you that it isn't always the easiest task to take on. And even when you do manage to create a comprehensive budget, it's difficult to plan for unexpected expenses or surprises down the road. And let's be honest - it can be difficult to stick to that budget when temptation arises. This makes it even more important to regularly reflect back on past spending and prepare for the future.
And because we all make mistakes with money, there's a good chance that when you look back at your healthcare spending over the last 12 months - there are some things you might wish you had done differently.
Let's take a look at some common mistakes that people make with their FSAs and how you can better prepare for the year to come.
You contributed too much (or too little)
It can be nearly impossible to guess at exactly how much you spend per year on qualified medical expenses if you haven't sat down to analyze your past spending. This can make it difficult to guess at how much money you should be contributing to your FSA. So eliminate the guesswork and take a look at your spending for the past year. (Having some handy calculation tools available never hurts, either.)
If you've found yourself with a lot of FSA money left over as you near the deadline, you should consider contributing less from each paycheck. If your estimated health expenses for next year are about the same as this year and you contribute less, you won't find yourself with the same surplus of funds at the deadline.
But if you found that you didn't have enough of your FSA funds left to cover all of your expenses, you should consider contributing more.
You didn't use all of your funds before your deadline
If you still have money left over - don't panic. There's still time to spend your money on qualified purchases or appointments. This is a great time of year to review exactly which expenses are eligible for reimbursement.
If you haven't been thinking beyond your appointments and prescriptions, you might be surprised at how many items are qualified. Everything from your child's braces, acupuncture, and household essentials are qualified expenses. Getting knowledgeable about what you can spend your FSA funds on can help you plan your spending for the year to come.
This is also a great time to go over your receipts and make sure you were reimbursed for all of your appointments and purchases throughout the year. It's easy to forget to submit claims when you or a dependent is sick or when life gets hectic.
You didn't learn the policies
It's important to get familiar with your specific plans policies and rules. Knowing all the foundations about what's required will save you headaches in the long run. If you're unsure of anything, don't be afraid to reach out to your administrator or HR department to get your questions answered.
You could be asked to pay back your FSA if you use it incorrectly, and in some cases improper use can lead to you no longer having access to your funds. Being aware of the resources available to you will leave much better prepared for scenarios like this.
New to FSAs? Need a refresher course in all things flex spending? Our weekly Flex-Ed column gives you a weekly dose of FSA Living 101, offering tips for making the most of your tax-free funds. Look for it every Thursday, exclusively on the FSAstore.com Learning Center.