If you just opened (or are about to open) an FSA during open enrollment, you know it's smart a money move, but you have no idea how much you should allocate. You've done your research and know that your employer offers flexible savings accounts, but you're not sure how to find your FSA allocation number.
In fact, you may not even be sure how much you spent on health expenses last year. Or maybe you had the perfect allocation total last year, but life has changed since then. (That tends to happen a lot in my household.)
If this sounds like you, don't panic. You've already taken the first step and decided that you want to open an FSA. The next step is simple: use an FSA calculator.
(As always, keep in mind that we're not financial professionals, nor is this website aiming to provide financial or tax advice. Be sure to speak with a qualified financial adviser before making determinations about your accounts.)
Calculate your FSA number
The best way to determine how much money you should allocate to your FSA is with an FSA calculator. The calculator asks you to input a variety of information, including your income and estimated expenses for each category. After you input your numbers, you're shown exactly how much you should allocate based on your estimates. You also learn how much you could save on taxes.
For example, if you earn $45,000 per year and allocate $2,500 to your FSA for health care expenses, your estimated tax savings from your FSA is $812.
But here's the deal—in order to use the calculator to accurately estimate your health care expenses, you need to have an idea of what those expenses will be. If you just went through a big life change or are a first-time FSA user, that might seem difficult. Luckily, it's not as hard as it seems.
Here are some expenses you might want to keep in mind.
If you're a new parent…
Congratulations! If you're a new parent, your health care expenses will likely increase thanks to an uptick in doctors appointments and health-related items for your baby. In general, new parents should expect to increase their FSA allocation.
(Plus, this might be a great time to open a dependent care FSA to pay for eligible child care expenses.)
If you're recently divorced…
If you're recently divorced and don't have children, your health care expenses might decrease because you're only responsible for your own health care expenses now. The best way to find your allocation number is to review last year's expenses and calculate your new number based only on your own expenses.
However, if you're recently divorced and have children, your FSA allocation number might stay the same or even increase, depending on your custody arrangement. Also, if you're planning on paying for daycare for your children, it might be a good idea to open a Dependent Care FSA.
If you have a recent health diagnosis…
If you've recently received a health diagnosis and are unsure what your health care expenses will look like now, it might be a good idea to increase your FSA contributions. Even if you allocate an extra $50 per month, it might make a big financial difference throughout the year. Plus, you might spend some of the money on FSA-eligible products related to your diagnosis.
If you're a first-time FSA user....
Welcome to the club! If you're a first time FSA user, it might be challenging to find the perfect allocation number, but that's okay. Even if you only put $100 per month towards you FSA, you could save hundreds of dollars in taxes.
Do your best to calculate your contribution number based on last year's health expenses, but don't worry if it's a little low or high. Next year, you'll be able to calculate more accurately.
It's okay if you don't find your "ideal" FSA contribution number. The most important thing is that you're starting to save money in your FSA and prepare for your health care expenses. Your bank account will thank you.
Smart, eligible buys...
The perfect solution for people with poor circulation or cold feet.
This is a great bandage set that offers a variety of sizes to cover the most common medical situations.
From FSA basics to the most specific account details, in our weekly Asked and Answered column, our team gets to the bottom of your most-pressing flex spending questions. It appears every Wednesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
My jaw dropped when I received the email from my accountant. I stared at my tax bill in disbelief for a few minutes, but reality quickly set in: I owe the IRS over $3,000. As it turns out, I'm one of the taxpayers who had insufficient tax withholding throughout 2018 and now owes money due to the Tax Cuts and Job Act that became official last year.
As it turns out, I'm one of the estimated 30 million Americans who owe money on their taxes this year. I'm lucky enough to have the funds to pay my bill in full, but it's still painful to part with the money. In many ways, I should have known better. Because here's the truth: I did not have an FSA in 2018.
It's embarrassing to admit because I thought I had already learned my lesson about tax-free health accounts. But once again, life happened. So as a result, I missed the boat on opening an FSA in 2018, and now I'm paying the price (literally).
It's too late to change what happened, but it's not too late to learn from it. Here's how much money I might have been able to save on taxes if I had opened an FSA.
My health care costs
After tallying my health care expenses — doctor's appointments, prescription medication, dental treatment and FSA-eligible supplies — I spent nearly $2,500 on health care in 2018. Nearly half of that came from unexpected dental treatment, which was FSA-eligible.
But the truth is that I thought I spent much less on health-related expenses last year. In fact, when I estimated how much I would spend on health care in 2018, I thought that I would spend $700. In other words, I thought I would spend $800 less than I actually did. Yikes.
My optimistic estimate about my health care expenses is actually part of human nature and our overly optimistic predictions for the future. It's often known as the optimistic update bias. This is important to understand because it can help us plan more realistically for the future.
The FSA calculator
I was shocked when I finally sat down to look at how much money I could have saved with an FSA last year. According to the FSA Store calculator, I could have saved $1,816 on taxes. That doesn't mean that I would necessarily owe less in taxes (although I probably would because it would have lowered my overall taxable income) but I would have paid less in taxes upfront.
The real kicker is that my 2018 net pay would have been nearly $2,000 higher if I had put $2,500 into my FSA. Plus, according to the calculator, I could have "broken even"—not saved or spent any extra money—if I had spent at least $684 from my FSA. In other words, even if I had set aside $2,500, but only spent the $700 I thought I would need for 2018, I wouldn't have gained or lost anything. (Although I probably could have used my extra funds to buy FSA-eligible health supplies…)
How to avoid these mistakes
The truth about my health-related finances is that I fell into the trap of short-term planning. I had a lot of financial goals for 2018 — investing, travelling, preparing for graduate school — and I wanted to save as much money as possible, and in my effort to cut costs, I actually ended up spending more money in the long-run.
It's great to be optimistic about the future, but if there's one thing I learned this year, it's that a healthy dose of skepticism (and number crunching) is better for my budget and my sanity.
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.
Have you used our FSA Calculator? It's one of the easiest ways to figure out your flexible spending account (FSA) allocation for the coming plan year. But if you overestimate or don't find yourself making qualifying purchases or visiting the doctor as often as expected, you may be sitting on extra cash you don't want to forfeit!
With the summer weather finally here (and many mid-year FSA deadlines approaching), this is the perfect time of year to splurge on FSA-eligible products, and you'd be amazed at how much $100 will cover to boost your long-term health and wellness. Here are a few ways you can spend down remaining FSA dollars based on our most popular customer groups!
From prenatal vitamins to breastfeeding supplies, new parents can build a foundation for the future by saving with their FSA!
BabyGanics Cover Up Baby Sunscreen for Face and Body SPF 50+, Fragrance Free, 6 oz - $11.99, Link
Medela Breast Milk Storage Solution - $32.99, Link
NoseFrida The Snotsucker Nasal Aspirator - $15.99, Link
Medela Breast Milk Cooler System - $23.99, Link
Thinkbaby LIVE STRONG Safe Sunscreen SPF 50, 3 oz - $12.99, Link
Whether you're looking to get back into the gym or building on your gains, FSA-eligible products can help you prevent and treat injuries, and help you manage your workout regimen free from acute and chronic pain.
KT TAPE PRO, Pre-cut, 20 Strip, Synthetic, Laser Blue, $19.99, Link
Arctic Ease Instant Cold Wrap Black (4"X60"), $15.99, Link
ACE 3" Self-Adhering Bandage, $5.09, Link
Icy Hot Smart Relief TENS Therapy Knee and Shoulder Starter Kit, $39.99, Link
KT Tape Recovery+ Patch 4 ct Black, $9.99, Link
Be safe on your next hike or camping trip with FSA-eligible products! Your FSA can cover sun protection, first aid supplies, foot cushioning treatments and more!
BullFrog Water Sport Lotion SPF 50, $11.99, Link
Band-Aid Advanced Healing Blister, Cushions, 6 ea, $5.79, Link
Adventure Medical Kits Sportsman Whitetail, $49.99, Link
Banana Boat Aloe Vera with Vitamin E Sunscreen Lip Balm SPF 45, 0.15 oz, $2.99, Link
Dr. Scholl's P.R.O. Pain Relief Orthotics for Lower Back, Men's Size 8-13, 1 pr, $12.79, Link
ACE 3" Elastic Bandage with Clips, $4.99, Link
Got a vacation on the horizon? FSAs are a boon for regular travelers to help you avoid motion sickness, neck stiffness and sunburn with a huge variety of travel necessities.
Vichy Idéal Capital Soleil SPF 45 Dry-Finish Body and Face Sunscreen with Antioxidants and Vitamin E, 5 Fl. Oz., $28.50, Link
Johnson & Johnson First Aid Kit, Safe Travels, 70 pc, $7.49, Link
IMAK HappiNeck Orthopedic Neck Support, $32.99, Link
Psi Bands Acupressure Wrist Bands - Racer Black, $18.99, Link
Solar Sense Clear Zinc Stick for Face and Lips, SPF 50, .45 oz, $4.99, Link
For everything you need to stay healthy year-round, rely on FSAstore.com! We have the web's largest selection of FSA-eligible products to help you maximize the potential of your employee benefits!
It's almost time for open enrollment 2015. Will you be signing up for an FSA again or changing your employee benefits? Learn more about FSAs with our 8 tips
It's almost time for open enrollment 2015 season! During this special time-frame at work, you'll be able to make changes to your employee benefits options, or keep the same benefits you already have.
Eight things to keep in mind ahead of open enrollment 2015:
1. Learn about qualifying events. If you've had a qualifying life-changing event during the year, you could change contribution amounts to your Flexible Spending Account (FSA) for the upcoming plan year. These "events" are lifestyle changes including having a baby or adopting a child (a change in tax dependents), getting married (a change in legal marital status), or starting a new job (change in employment status affecting your health benefits). There are other types of lifestyle changes that could qualify, so it's good to ask your FSA administrator about this. If you're not sure who to contact, you can always ask the HR department for more information.
2. Update how much you are contributing. Maybe you opted into an FSA, and realized that you hadn't contributed enough tax-free money to it. Open enrollment is the time to recalculate your expenses for the year, and an FSA Calculator can help you figure out estimated savings on FSA eligible services or products.
3. Maximize your FSA money. If you and your spouse can separately sign up for FSAs at work, you could both set aside up to $2,550 per account. That's $5,100 in potential tax-free savings to use for medical expenses like dental and eye care, and healthcare products, as well!
4. Consider other types of FSAs. If you have a family, you may have questions about other types of expenses including those of a Dependent Care FSA. Open enrollment will allow you to opt in (if that plan is available to you) and to ask your HR department questions about these plans.
5. Stay on top of plan-year extensions. An FSA could have different plan-year extensions or deadlines by which you must use your FSA dollars. Some plans have a Carryover option (up to $500 that rolls over to the next year) or a Grace Period - an additional two and a half months to use your account.
6. Keep track of your balance.Take a monthly inventory of how much you've spent by checking your account balance.
7. Research eligible expenses. If you want to know what's covered, it's good to read your plan guidelines to discover available services or products. You can also browse the FSA Eligibility List to discover FSA eligible expenses!
8. Ask questions before your open enrollment begins. Open enrollment can be stressful, especially if you're scrambling for information on health benefits. And, if you don't pay attention, you might automatically be enrolled in similar benefits, and that won't work if you have different healthcare needs. So, if you ask questions before open enrollment starts and do research, you'll better understand the available options and what makes sense for you and your family.
Other ways to use your FSA this fall (and to enjoy the last of summer) with products:
1. Prep for warm weather. Labor Day weekend is still ahead! If you're going to the beach or taking a tropical vacation, you'll want to bring along sunscreen, which is covered by an FSA!
2. Take care of pain easily after exercising with hot/cold therapy packs, which are available with your FSA dollars.
3. Update your first-aid kits for travel, at home, or even in the office.
4. Prep your kids for back to school. Did you know that physicals are covered with an FSA? When was the last time your child had a dental or vision exam? Expenses for both are also covered with an FSA. FSA Store even has a special Back to School section with products to keep your kids healthy.
Shop for products you'll need with your FSA at FSAstore.com
Rule Changes Increase Flexibility in Pretax Health Care Accounts
"AS open enrollment season approaches for those with workplace health benefits, employees may want to take a fresh look at health care flexible spending accounts, if their employers offer them, because the rules for the accounts have changed.
Flexible spending accounts, or F.S.A.s, can help save money by letting people use pretax dollars to pay for costs a health plan doesn’t cover. That might include dental care, fertility treatments or equipment like blood pressure monitors. About 14 million families participate in health F.S.A.s, the federal government estimates."
The FSAstore.com Calculator was featured in the article.
Read the full article via The New York Times
Figuring out a budget for health care can be tricky. After all, how do you know exactly what health care expenses you might have? Health care costs can vary greatly, but with an FSA you have a few added benefits.
5 Ways to Maximize Your FSA Savings
- The money you contribute is pre-tax. If you shop at FSAstore.com, you can save up to 40% by using your FSA (even more savings)!
- You should look at your health care costs every year. How much you need to contribute to an FSA can vary depending on the out-of-pocket medical expenses you have. Bonus: You can cover deductibles, co-pays and coinsurance with an FSA.
- Calculate your yearly health spending and potential savings with an FSA with our FSA Calculator.
- Ask your FSA administrator aboutmid-yearchanges to your contribution. You might be able to change your FSA contribution amount mid-year, if you have a "qualifying" event.Examples ofa mid-year change that is considereda "qualifying event" are having a baby, getting married, or changing jobs that affects your FSA eligibility status.Check with yourFSA administrator to see if your plan allows for these typesof changes.
- Shop for FSA eligible products at FSAstore.com. We have a large selection of many types of products to choose from with your FSA. You might even be surprised at which products are available for FSA coverage.
Shopping Online with Your Flexible Spending Account
- Exclusively FSA eligible products. FSAstore.com is solely stocked with FSA eligible products ranging from band-aids to first aid kits to blood pressure monitors to contact lens care. We follow strict eligibility guidelines set forth by the IRS, so our products are guaranteed to be eligible. If you encounter any problems with claims validation, please let us know and we will gladly talk to your FSA administrator to resolve any issues.
- Accepting all FSA cards & major credit cards. If your FSA administrator gives you an FSA card, your FSA funds are automatically deducted from your card. That means when you shop at FSAstore.com or visit a medical provider, you won'thave paperwork to submit to your provider. If you do not have an FSA card, you can still shop with us and print out an itemized receipt for FSA reimbursement.
- Extra savings with your FSA. Your FSA already saves you on taxes (up to 40% savings), and by shopping at FSAstore.com, you could save even more with our year-round special offers. Shipping is free on all orders over $50!
- Tools to help you track your FSA. Our site has an FSA Calculator to help you calculate yearly FSA spending and an FSA Deadline Tracker to never miss important plan-year deadlines again!
- Tools to help you learn about your FSA. Our FSA Learning Center and our blog keep you informed on any changes in the FSA world and provide answers to common questions.
Has your company had open enrollment for your health benefits yet? Do you have an enrollment deadline coming up soon? If you elected an FSA last year, now is a good time to evaluate your contribution limit depending on your medical needs. Additionally, if your life circumstances changed in the last year (i.e. you got married or switched jobs) in what are known as qualifying events, your expected out-of-pocket medical expenses could be affected as well. Learn more in our blog post on how employment changes could affect your FSA.
Open enrollment is often the only opportunity you’ll have to change your FSA contribution amount. When deciding how much to contribute, be sure to estimate your FSA eligible expenses for the year. Some employers do allow for mid-year changes due to qualifying events, but it’s best to check in about your individual FSA. You’ll likely need to sign up for an FSA every year, though some FSA administrators allow for an automatic renewal of your election. You can use your FSA throughout the year for over-the-counter items and out-of-pocket medical expenses toward a visit with a health care provider. Our FSA Calculator can certainly help you estimate your annual expenses, and you’ll quickly find out the potential tax savings of an FSA as well.
If you have questions about your FSA, it’s best to consult your FSA administrator. Your FSAadministrator has access to your FSA account details, your plan’s guidelines and more. If you’re not sure who your administrator is, ask your HR department.
Top 5 FSAstore.com solutions to help you manage and understand your FSA:
1. We only sell FSA eligible products. While these items are often also available at your local drugstore, our site reduces the confusion about eligibility because everything is clearly labeled. A red checkmark means the item is readily available; the blue Rx logo means the item requires a prescription for FSA reimbursement. At a drugstore it might be difficult to tell which items are eligible, and not all drugstores accept an FSA card to help process expenses for FSA reimbursement. Not to mention…by shopping online you avoid the hassle of traveling to the drugstore.
2. We give access to FSA eligible services through a searchable database of health care providers. Everything from psychiatrists to chiropractors to ophthalmologists and dentists! Did you know LASIK is an FSA eligible expense?
3. Our free tools help FSA holders better understand their plan:
- An FSA Calculator helps estimate expenses during open enrollment.
- An FSA Learning Center provides valuable information about the FSA plan.
- An FSA Eligibility List lets you browse eligible products
- An FSA Rx process lets you submit prescriptions and we can help process these for you
- A new FSA tracker lets customers opt in for FSA deadline reminders to avoid forfeiting funds.
4. You can effectively save up to 40% at FSAstore.com by using your pre-tax money. Enjoy additional savings through our exclusive deals with the convenience of shopping from home!
5. We accept FSA debit cards and all major credit cards. FSA funds are automatically deducted from your FSA card, so you won't need to submit paperwork!
A Flexible Spending Account does not have to be calendar year. The FSA plan Administrator or employer decides when the FSA plan year begins, and often aligns the FSA to match their health plan or fiscal year.
There is an “open enrollment” period once a year. That’s when you can sign up for an FSA and decide how much money to put into it for the coming plan year. Open enrollment usually takes place around the same time you sign up for your health insurance.
Often it’s from mid-November to mid-December, though the timing varies by employer. Check out our FSA Calculator to help you estimate FSA expenses during open enrollment.
Shop for your FSA online with us.
The end of 2012 is 24 hours away! It's almost time to celebrate the New Year, reminisce about 2012 and set your New Year's resolutions. However, the end of the year is also an important moment to think about your Flexible Spending Account (FSA). Many flexible spending account (FSAs) plan years end on Dec. 31, so you should make sure to check your account and spend down your remaining balance before it's too late! It's “use it or lose it" and won't roll over to your next plan year.
Using your FSA funds
Wondering how to spend your remaining FSA dollars? Check out FSAstore.com, which offers thousands of FSA eligible products in categories such as baby care, diabetes care, skin care, first aid, pain relief and smoking cessation. You can look at our FSA Eligibility List to see exactly which products are FSA eligible with or without a prescription. You might be surprised to find that sunscreen, reading glasses, lip balm, heat wraps and even eye masks are FSA eligible! Or you can check out FSAstore's FSA Eligible Services to determine what medical services are eligible for reimbursement. We also have an FSA Learning Center to answer any of your other FSA-related questions.
The end of your plan year is also a time to think about what you want to contribute to your FSA in the upcoming year. Keep in mind new health care regulations are bringing changes to FSA contribution limits. For plans starting on or after Jan. 1, 2013, there will be a $2,500 annual cap on contributions. Need help figuring out how much to contribute to your FSA? Use the FSA Calculator to help estimate your annual health spending during open enrollment, and determine just how much you'll save using an FSA.
If you're reading this too late, and your plan-year has already passed, don't worry! Most plans have a grace period of up to two-and-a-half months for you to spend down the remaining balance of your account before forfeiting your funds. Don't forget to check FSAstore.com to spend down, stock up, and meet all of your FSA needs!
Our FSAstore.com team wishes everyone a Happy New Year!