Million of Americans are missing out on one of the best-kept financial secrets in America: Flexible Spending Accounts. Are you one of them?
What is a Flexible Spending Account and why should you care?
A flexible spending account is a benefit offered by many employers to help you pay for expenses not covered by your health insurance (85% of companies with over 500 employees offer FSAs). Examples of expenses that can be covered by funds in a flexible spending account range from out-of-pocket co-pays for doctor visits and prescriptions to a range of qualified dental and eye care expenses such as braces and eyeglasses.
Yet each year nearly 80% of Americans eligible for this valuable benefit fail to use it. That's why I've teamed up with WageWorks on a SaveSmartSpendHealthy campaign to highlight the benefits of FSAs. Let's face it. In today's economy, millions of hard-working Americans are struggling to make ends meet. In this kind of environment it's vital to stretch every dollar as far as you can. Here's how FSAs can help you do that:
A. FSAs save you money. The reason is that you are spending pre-tax dollars. If that sounds like a bunch of financial mumbo-jumbo, think of it this way. Say your health care plan doesn't cover dental visits. You go for a check up and the bill is $100. If your effective tax rate is 33% you'd have to earn $150 to pay for that $100 visit. If you participate in an FSA, however, you'd only have to earn $100 to pay that $100. You can learn more about what types of expenses FSAs can cover at SaveSmartSpendHealthy.com.
B. FSAs help you to stay on budget. Studies show that people who write down their goals are more likely to achieve them. People who are on diets tend to eat less when they commit to writing down everything that goes in their mouths. In other words - what gets measured gets managed. So if you want to better manage your money, paying attention to what you are spending on healthcare costs can really help. The sheer act of signing up for and participating in an FSA can help you stay on top of your healthcare costs by tuning you into them.
C. FSAs help you stay healthy. Perhaps the best part of all, FSAs make it more affordable for you to get preventative care - get those teeth cleaned, have regular annual physicals, take and stay on prescribed medication. According to the National Bureau of Economic Research, over one-quarter of Americans have cut down on their preventative care since the economy started its downward spiral in 2007. If there's one investment that never fails, it's taking care of your health. That's why learning the ABCs of FSAs is so rewarding.
If you don't know whether you have access to an FSA, talk to your HR department today.