Using FSAs to Build Your Savings: 3 Types of Flexible Spending Accounts

Flexible spending accounts are often underutilized because most of us don’t understand how they work or how to make them work for us and our families. Truth is, if done correctly, you could save a ton!

A Flexible Spending Account can help reduce your taxes and increase your take-home pay – giving you those extra dollars for the things you really want; like vacations, big screen tvs, shoes, and… well, more shoes. With a range of FSA products from which to choose, you are in control of your money and get the chance to get more out of life by keeping your money in your own wallet.

On average, people save 23% in taxes (assuming Federal, state and social security taxes) by paying their out-of-pocket expenses on a pre-tax basis through an FSA. Many employers make using your account simple, by issuing a debit card, allowing immediate access to your funds.

 

Not all FSAs are created equal. Let’s explore 3 kinds of FSAs that can help put money back into your pockets.

 

Mission Keep My Money: Option 1 – Healthcare FSA

Healthcare FSAs allows you to pay for qualified medical expenses using pre-tax dollars. These may include medical, dental, vision, hearing, over-the-counter items and other costs such as co-pays … PRE-TAX! Because you’re paying for these expenses before taxes are taken out of your paycheck, you’ll save significantly by the end of the year. This means more money that you can use for anything you like!

 

Mission Keep My Money: Option 2 – Dependent Day Care FSA

Parent or not, you have heard of the astronomical prices of childcare. What if you could pay for daycare expenses PRE-TAX? Welp … the Dependent Day Care FSA allows you to pay for dependent day care expenses using pre-tax dollars, reimbursing you for these expenses so you and your spouse can work. Qualified expenses include day care, before-and-after school programs, nursery or preschool, summer day camp, even adult day care. It’s an easy way to manage your day care needs while giving you extra tax savings to enjoy the things you like.

 

Mission Keep My Money: Option 3 – Limited Purpose FSA

A Limited Purpose Flexible Spending Account (LPFSA) is an FSA that only reimburses you for eligible vision and dental expenses. It’s available to those who are enrolled in a High Deductible (HD) Health Plan as well as a Health Savings Accounts (HSA). A LPFSA lets you save money on taxes by using this account for ongoing vision and dental expenses, while preserving your HSA funds for other purposes, including simply saving them. LPFSAs are great if you know your will have to pay for braces or major dental/vision work soon. It’s smart, convenient and gives you a real boost in spending power.

 

Want to keep more of your money? Ask your Human Resource department if an FSA is an option in your benefit package.

Let me know which one you choose.

 

Still Building Wealth in My Stilettos,

Tretta

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