While it's almost April 15, and you may still need to get your taxes done...one item you won't need to worry about is your Flexible Spending Account (FSA).
While it's almost April 15, and you may still need to get your taxes done...one item you won't need to worry about is your Flexible Spending Account (FSA). Luckily, youdon't need to worry about your Flexible Spending Account or do anything extra when it comes to taxes and your FSA.
But, do keep in mind the tax savings with your Flexible Spending Account, which you'll be able to enjoy during the year.
Flexible Spending Account Savings
1. An FSA is Tax-Free!
Your exact savings depend on the amount you set aside with your FSA, and what your tax bracket is. Typically, savings are around 40% on money you put in your FSA. Check out our FSA Calculator to estimate how much you could save.
2. Use for Expenses Not Covered By Insurance
An added perk of a Flexible Spending Account is the ability to use this account for medical services which your regular insurance may not cover - including alternative medical providers like chiropractors, acupuncturists, and more.
You can, however, also use your FSA for typical medical expenses like:
Dental care: Braces, dental cleanings, fillings, bridges, and denture products
Cancer screenings, body scans, and lab fees related to medical care.
Medical fees like co-pays, deductibles and co-insurance. Premiums are not covered by an FSA.
Counseling for a medical or mental condition
Dependent Care FSA expenses:
Medical expenses for a disabled dependent are eligible. Under a Dependent Care FSA, expenses for care of a disabled dependent are eligible provided that the care is for a qualifying dependent.Expenses for a disabled person, such as a wheelchair, braille books and magazines, a guide dog and special medical care, are eligible.
Many healthcare products you use everyday can also be purchased with your pre-tax FSA. If you wear contact lenses, you can buy these and contact lens solution with your FSA. The items in your first-aid kit are also FSA eligible. Pain relief hot/cold therapy packs to treat sore muscles or other aches are also covered with your account.
Check out our wide selection of products you can buy at FSAstore.com and save!
As April 15 approaches, it's important to consider the benefits of your FSA. A recent article in USA Today stressed some of the tax breaks you could be enjoying and noted, "Even after April 15, make sure you're not missing out on other valuable tax breaks for the rest of 2015—namely, pre-tax contributions to an employer-sponsored retirement plan or flexible spending accounts for medical, child care and transit expenses. "That's money left on the table," Labant said."
Flexible Spending Accounts can cover a variety of expenses - ranging from healthcare products to medical services - and this is all on a pre-tax basis.
Do I submit additional paperwork when it comes to taxes (if I have an FSA)?
Money is taken out of your paychecks on a pre-tax basis every month, which reduces your taxable income. You don't have to do any additional paperwork come tax time. What you should always keep in mind is how much money is available in your FSA account throughout the year, so you can fully utilize the benefits of the plan.
Can I ever change how much I contribute to an FSA?
Employers provide an open enrollment period during which you can add or change your coverage options, including your FSA contributions. You can contribute up to $2,550 per year to an FSA. Once the FSA plan year has begun, changes to your FSA are typically only allowed if there is a qualifying event, which may include getting married, changing jobs, and certain other circumstances. Each FSA plan defines the circumstances in which you can change your contribution. Your FSA administrator can confirm these with you, and your Summary Plan Document outlines provisions of your FSA plan.
Again, the best way to use your FSA is to keep tabs on it during the plan year. Be sure to apply it for different out-of-pocket medical expenses ranging from medical care to healthcare products.
Check out FSAstore.com's FSA Eligibility List for a full list of eligible expenses like products and services.
It's almost April 15 – the final day to get your income tax returns in. Some early birds got their taxes done a while ago, but many dread the process and wait until the last minute.
The good news is that you still have time to file taxes for a few more days!
With taxes in mind, here are 3 ways in which you can save on health care throughout the year that will make tax season a little less painful.
1. Enjoy Your Tax-Free FSA
If you're signed up for a Flexible Spending Account, then you know that these plans are tax-free. An FSA provides mutual benefits to you and your employer. FSAs are not only exempt from income taxes, but also from payroll taxes for Medicare and Social Security. Read more about how a flex spending account works.
Tax Filing Tip: You cannot claim expenses covered by your FSA on your annual income tax return. There are actually no reporting requirements for FSAs – you can breathe easy. Keep in mind that total medical expenses that can be deductible on your income tax return have to exceed 7.5% of your adjusted gross income for 2012. This number will be increasing to 10% in 2013. Luckily, FSAs do not have such limits!
*If you have an HSA, you must report it using Forms 8889 & 1040, according to the IRS. Contributions to HSAs are also tax-free, and the money put into these plans can be used at a later date.
2. Reduce Spending on Services
A recent Wall Street Journal report revealed that Americans spent an average of $6,815 (per person) on health care in 2009. By using an FSA, you can save up to 40% on the money you contribute towards qualified health expenses. The same Wall Street Journal article notes that “big-spending states had some of the highest per-person spending on hospital care and doctors' services, which make up the bulk of medical costs."
FSA Eligible Services
Need to visit a specialist? You can with your FSA. Your FSA will cover co-payments and deductibles on visits to FSA eligible service specialists such as chiropractors, dentists, surgeons, ophthalmologists and others.
3. Use Pre-tax Money on Qualified Products
Many common health care products (contact lens solution, band aids, shoe inserts, etc.) are eligible with an FSA. Any over-the-counter medicines will require a prescription to be reimbursed with your FSA, but thousands of products are fully eligible without prescriptions. FSA Store regularly updates our selection of FSA eligible products.