Flexible Spending Account Maxed out for 2006

I just received the final check from our 2006 Flexible Spending Account (FSA). We cashed in early and often (including a shiny new set of braces for our eight year old son), and we’re officially tapped out for the year — in fact, this happened even earlier in the year than when we tapped out our FSA in 2005. As it turns out, we’re actually going to end up making a profit this year, as we pulled out all of the money before our move (and the ensuing job change) — thus I won’t be around to pay the full amount back in. This has happened to us once before, and I actually felt pretty guilty about it (at first). But then I realized that I’m making just a tiny dent in all those forfeited dollars from people who failed to heed the use-it-or-lose-it clause. Yep, I’m rationalizing. But until they fix the way that FSAs work and allow people to carry funds forward (within reason), I’m not going to lose any sleep over an employer losing out on an employee that was shrewd enough to stick it to them.

8 Responses to “Flexible Spending Account Maxed out for 2006”

  1. Anonymous

    My employer is like that too, anything spent but not earned has to get paid back when you leave.

    I go with an HSA myself. I think that they should get rid of MSAs and FSAs and allow HSAs for anyone.

  2. Anonymous

    Hmm – the FSA contract I have to sign with my employer says that if I quit and have already been reimbursed more money than has been taken out of my paycheck I have to repay them.

    Seems like different employers have different rules. My husband’s compnay only lets him put $5,000 in, for either medical expenses OR daycare. My employer will let us put $5,000 for EACH.

  3. Anonymous

    I always underallocate my dollars. In the past, I have lost money and I have also stuck it to my employer. I felt guilty about the last part, but not really. I’m sure on balance of things, I have underutilized my funds overall.

    All I can say is that I’m glad I bumped it up a lot this year and only am sorry I didn’t bump it up some more. I have a post I am hesitant to publish about my FSA, but overall, I’m really glad I have it and the tax savings for me is pretty significant.

  4. Anonymous

    My employer is going to start this type of program in 2007, so I am looking forward to seeing how they roll it out. I have heard a lot of pro’s and con’s, so I am excited to add my own opinion.

  5. Anonymous

    I hate the way these plans work. My wife and I were expecting a baby in July, so last November we budgeted the FSA dollars to pay for the birth. Then in January, we miscarried. So even though we had already committed to a certain amount for the year, I had to beg my employer to drop our FSA dollars down to a more reasonable level since there was no way we could spend that kind of money on our own. Thankfully, my employer helped us out.

    But then we got pregnant again. This one seems to be going fine. And guess when the baby’s due? December 27. Which means we essentially won’t be able to use flex money to pay for it, because either 1) the baby will come in 2006, in which case our flex dollars are already used up, or 2) the baby comes in early 2007, but we have to commit to our 2007 FSA allocation in November.

    My only options are to either forget about using flex dollars for the birth, or beg my employer (again) to allow us to not commit to using flex dollars until 1/1/07.

  6. Anonymous

    Kira: It is my understanding that forfeited funds must stay in a holding account for other FSA funds. So, if employees let their funds expire, the money stays in that account, and the employer does not actually have to fund it with your funds until they have exceeded the funds left from the prior year. So, you are having funds withheld that may just “dissappear” because there was money to cover it already.

    FSA’s are nice, but they really should have a provision similar to HSA’s, which do allow you to accumulate funds and invest them for growth. These funds can be saved for retirement, but I am not sure if they must still be used for medical expenses, or if you can use them for general income. In any event, you are more likely to have more medical expenses later, so it is nearly a moot point.

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