Around here, open enrollment has come and gone. All in all, it was a pretty painless process for us. Our health insurance increased in price by roughly 7%, my long term disability (LTD) coverage actually improved a bit, and everything else remained pretty much the same. The only real decision that we had to make was how much to set aside in our flexible spending account (FSA).
Funding our FSA
In the past, we’ve always erred on the side of caution due to the use-it-or-lose-it nature of FSAs. Thus, we’ve typically spent out our account well before the end of the year, and have thus (effectively) left money on the table in the form of tax breaks that we didn’t take. For 2008, we tried to be a bit more aggressive, but still ended up spending it out by the end of summer.
This time around, we’re pulling out all the stops. The maximum allowable election for 2009 is $5k, and that’s exactly what we’re doing. The primary reason we’re being so aggressive is that our oldest son is slated to get braces in January, so we’ll spend a major chunk of our FSA right off the bat. As for the remainder, we’ll easily blow through that over the course of the year.
Now it’s your turn… Use your FSA
If your employer offers an FSA, you really should consider participating. While the extent of your savings depends on the amount you set aside as well as your income tax bracket, you can easily save hundreds of dollars on your tax bill. And if you’re looking to reduce your taxes even further, be sure to check out my list of common income tax deductions.