Flexible Spending Accounts...Update
Are you using a Flexible Spending Account (FSA)?
These accounts allow you to set aside a specific amount from your paycheck into an account to pay for out-of pocket medical and dental expenses. This contribution is exempt from federal, state and payroll taxes. There has been several changes to the original FSA account. In September, 2003 the federal government ruled that FSA participants may use pretax dollars to purchase most over-the-counter (OTC) drugs, if their employer's FSA plan allows it. Eligible OTC drug expenses must alleviate or treat personal injuries or sickness, such as cold medicines, antacids, allergy medicines, and pain relievers.
In the past the FSA had a "use it or lose it rule". The employer kept unused money in the account at year end. Now, companies can give their employees a grace period of 21/2 months after the end of the calendar year. Now you'll have until March 15 to pay for eligible expenses.
Here's a update.
Flexible spending accounts are one of the few ways workers have to cut out-of-pocket medical costs, which benefits consultant Hewitt Associates predicts will jump from $1,366 on average this year to $1,524 in 2006 despite the expectation that overall health care expenses will increase next year at the slowest pace since 1999.
Flex accounts are one of the few ways today to pinch health care pennies.
The current tax code won't let you spend flexible-spending-account dollars on your share of health care premiums, but flex accounts will cover co-payments for doctors, dentists, prescription drugs, eyeglasses and contact lenses, and the like.
Wise Owl