Don't Forget About Expiring FSA Balances!
Welcome to Saving Money with Andrew!
Last year, I wrote about Saving Money with FSAs and HSAs. If you’re entering your benefit election period at work and don’t already have an FSA or HSA, I urge you to read the post and think about whether they could save you some money next year. Half of all Americans have employer-provided health insurance, but far fewer have a healthcare FSA, dependent care FSA, or an HSA. If you’re one of those ~160 million people, one of these options could save you a lot of money.
And if you already have an FSA (for healthcare expenses) or a dependent care FSA (for childcare and related expenses), you are likely approaching the end of your current plan year. Most plans I have dealt with either have a 9/30 or 12/31 year-end. Remember these funds are normally “use it or lose it”, and you must file claims by your employer’s deadline.
Fortunately, amid the pandemic many employers have significantly extended deadlines to apply for reimbursement, and loosened rules on deferring amounts to subsequent years. If you have unused funds from 2020, you should check if it’s possible to file claims or defer unused balances, and if you still have a 2021 balance, you should make sure you will have enough claims to use your remaining balance.
In our case, I use a dependent care FSA each year and contribute the maximum amount via payroll deduction.[1] Then, once I receive and pay our preschool tuition bill for the year, I immediately file a claim with our FSA administrator and receive reimbursement for that amount. Because the contribution and reimbursement are not treated as taxable income, the dependent care FSA saves us more than $1000 in taxes each year.
And now…Andrew’s pick(s) of the week:
I find Norm Macdonald hilarious, but a lot of people don’t. And I can’t really link to some of his best clips (this is a family-friendly newsletter!). But this Conan O’Brien podcast about Norm Macdonald, in the wake of Norm’s passing at only 61 years old, is a great tribute to his comedic style.
If you’ve ever had a toddler (and probably even if you haven’t) I think you’ll enjoy Simon Rich’s hilarious short story, Learning the Ropes.
I hope this has been helpful. If you liked it, please share it on social media! Also, please send me your feedback, requests, and success stories.
[1] For our plan, the maximum dependent care FSA contribution for 2021 was $5000, though temporary legislation allowed some employers to use a higher limit for 2021 only.