And another benefit to flexible spending
I have a health care flexible spending account, which I allotted a big chunk of change to for 2008 since I have quite a few medical expenses coming up. This amounts to about $72 being withheld from each of my paychecks. Now, I’ve gotten paid once so far this year, so only $72 has been withheld. Yet I’ve submitted over $150 in expenses so far, which I’ve gotten reimbursed for already. (Long before they take that much out of my check.) It’s sort of like an interest-free loan to myself, that I actually come out ahead in the end with. In other words, you don’t have to wait until they’ve taken an amount from your check that’s equal to what you’ve spent. You can be reimbursed as soon as you’ve had the medical treatment.
January 25th, 2008 at 6:30 am
I think you can look at this either way. If you use the money before its accumulated, its like getting an interest free loan until you contribute that much. If you use it afterwards, its an interest free deposite from when you put it in till you use it. Figuring that the collection of all people in the plan will have expenses fairly randomly distributed throughout the year, it breaks about even.
Where you can win is if you intentionnally plan for a big expense to happen in January. Like holding off a surgery till them and paying it off throughout the year.
I used to have a FSA but am switched to a HDHP a couple years ago and now save in a Health Savings Account.. where you lose the benefit of using the money before you contribute but gain interest or investment gain and don’t have to use it by the end of the year.
January 26th, 2008 at 2:57 pm
Yes, that’s true. I do have my big expenses scheduled for early in the year though.