How does flexible medical spending account work?

[Armitage]

Originally posted by: CPA

Originally posted by: Armitage
I use both HSA (Healthcare Spending Account) and DSA (Dependent Care Spending Account). It may vary by company, but at mine, you only get reimbursed to the limit of what you have contributed. So, if I set up my HSA to total $1000 over the year, and then have $1000 of dental work done in January, I won't receive the $1000 in a lump sum. It will be paid out to me monthly, as I contribute, so I won't have the full $1000 until the end of the year.

FWIW, guess who gets to keep the money if you don't spend it all by the end of the year? The company that administers the plan! Guess they have some incentives to deny claims :roll:

If that last part is true, then your company did a bad part in negotiations. Normally, it would be your company that would receive the leftover money. Either way, you would be screwed out of it.

Interesting. I was told that by somebnody who should know, but maybe they don't. Not sure if I'm any happier about my employer getting it ... there's no good reason it shouldn't just roll over, or be returned (and taxed accordingly).

Also, most companies do allow for the lump sum payment from a medical plan prior to all contributions being put in. Your company probably went the other way to insure that you didn't take advantage of the system if you were reimbursed a large amount at the beginning of the year, then left.

Another interesting bit. I'll have to bring this up at our yearly benefits briefing that should be coming up soon.

 

[welst10]

I have been putting a few hundred $ per year on my medical spedning account in last 2 yrs. I have used all of them.

 

[welst10]

Originally posted by: Armitage
I use both HSA (Healthcare Spending Account) and DSA (Dependent Care Spending Account). It may vary by company, but at mine, you only get reimbursed to the limit of what you have contributed. So, if I set up my HSA to total $1000 over the year, and then have $1000 of dental work done in January, I won't receive the $1000 in a lump sum. It will be paid out to me monthly, as I contribute, so I won't have the full $1000 until the end of the year.

FWIW, guess who gets to keep the money if you don't spend it all by the end of the year? The company that administers the plan! Guess they have some incentives to deny claims :roll:

I thought HSA = Health Savings Account, it's kinda like 401K

 

[robphelan]

Originally posted by: welst10

Originally posted by: Armitage
I use both HSA (Healthcare Spending Account) and DSA (Dependent Care Spending Account). It may vary by company, but at mine, you only get reimbursed to the limit of what you have contributed. So, if I set up my HSA to total $1000 over the year, and then have $1000 of dental work done in January, I won't receive the $1000 in a lump sum. It will be paid out to me monthly, as I contribute, so I won't have the full $1000 until the end of the year.

FWIW, guess who gets to keep the money if you don't spend it all by the end of the year? The company that administers the plan! Guess they have some incentives to deny claims :roll:

I thought HSA = Health Savings Account, it's kinda like 401K

If your company is keeping it, they have a problem. In the least, it's forfeited to the gov't, but the money that's left over where I work is divided up equally and doled out equally to all the contributors.

 

[joe678]

i read about losing unused money in fsa, but when i contributed they cut me a check for the full amount ahead of time... better for me, up front $ like an advance on my salary!

 

[DT4K]

Originally posted by: CPA

Originally posted by: Jeraden
There is usually a limit on how much you can contribute to a spending account. I don't know if its an IRS limit or not, but everywhere I worked has always capped it. Where I work now its capped at 2k per year. So chances are you aren't going to be able to put 5k in it.

There is no limit on the medial flexible spending account. It is set by the employer. The dependent care spending account is limited to $5K/year per the IRS.

Is that the same as an HCRA (health care reimbursement account)?
I contributed $2400 this year to my HCRA account because that was the max. I thought our HR rep said that max amount was mandated by the feds. In my case, my company does reimburse me up to the total amount even if I haven't contributed that much yet. So I could get $1000 reimbursement in January even though I had just started contributions for the year. But I know my mother's employer does not do that, so it seems to vary by company.

The great thing about my company's HCRA plan is that I don't have to file any claims for medical reimbursements. My HCRA is managed by the same company as our health insurance, so when the doctor files a claim with my insurance company, any unpaid amount is automatically filed as an HCRA claim without me having to do any paperwork. Makes it very nice, but apparently this is pretty uncommon and most people have to send in a claim every time they want a reimbursement.

Our HR rep said that the government is currently considering ending the "use it or lose it" regulations and allowing money to roll over to the next year. If this happens, then there is literally no reason not to use this tax advantage.

 

[Lvis]

Ours has worked very well. I can put up to 2000 in it, and spend it on the second of January if I want, and they will cut me a check.

Like others have said, just make sure you can spend it all; or you lose it.

It's a great way to get a discount on stuff that never goes on sale.