Health Care Expenses

Yesterday, I sat down and tried to figure out how much money to put into my FSA for the year.  For those of you who are already confused, in brief, an FSA, or flexible spending account, is a way for employees to set aside a portion of their earnings pre-tax to be used for qualified expenses.  It’s a great deal, but the hard part is figuring out just how much money to put into that FSA every year.

This is a “use it or lose it” plan, meaning that whatever I don’t use by the end of the year (well, the end of the grace period, which is mid-March) disappears.  So I want to try to estimate as closely as possible, but not go over.  Sure, if I have a little bit left at the end of the year, I can restock my medicine cabinet with Aleve and sunscreen and those sorts of things, but one only needs so many OTC medications.

One perk that I learned about with my FSA is that I can use the money before it’s technically there!  Let’s say that I decide to put $260 into my FSA this year, which would be $10 out of every paycheck.  And then on January 15, after only one paycheck, I have a medical expense of $100.  I can use that $100 to pay the bill, even though I’ve only contributed $10.  Because I have already agreed to have a total of $260 taken out of my paycheck, I can spend that entire $260 before it’s there.

But trying to estimate my medical expenses is harder than I thought it would be.  Regular prescriptions are easy to figure out, as is the cost for my disposable contacts.  But beyond that?  It’s tough.  I might be excessively healthy next year.  I might be not so healthy next year.  Who knows!  So I used some reasonable estimates, made some wild guesses, and picked a number.  And now it’s a game to see how close I managed to come.