The Frugal Dater

We’re going to continue our series of taking advantage of savings from part 1 here with asking the question of Do you FLEX?

This has to be one of the more timely topics with all the healthcare buzz going around, and we’re going getting into any of the politics here (cause there’s thousands of other blogs ranting and raving about that) but we’re going to take another look at being able to save more of the dollars that you’re already spending.

The FLEX in the question refers to Flexible spending accounts used with health care spending. The funny thing is though, most people don’t even take the time to read through all the things that are eligible for the dollars that you put into them. Now I’m going to look at things from a Single person’s point of view (because that’s who this blog is for).

Let’s go through a case scenario to see what we could save:

Assumption 1)  You’re spending around $1000 per year on Health care & related costs currently (not including catastrophic events)
Assumption 2) Currently you’re using after tax dollars to pay your doctor, dentist & Rx co-pays as well as other health care items
Assumption 3) By using pre-tax dollars you could save 7.5% on every dollar (once again modest but realistic)
Yearly Savings ($1000 X 0.075) = $75

Now once again 75 bucks isn’t a whole lot of money, but if you took that and added it to the $60.36 that could have been saved from part 1, then you’re already up to $135.36.

Now if you’re not already signed up for the Flexible Spending option with your Employer, most likely you’ll have to wait until open enrollment time comes around (but in most cases that’s right around the corner). Here’s an excellent article from CNNMoney.com about open enrollement options.

Paying for the doctor or dentist or even items at the drugstore isn’t any kind of hassle, In my case with my current plan I simply have a “credit / debit card” that is for health care expenses only. Now with a previous employer the FLEX spending reimbursement was a little tricker, you had to pay out of pocket first and keep the receipts then fill out the plan’s little spreadsheet at the end of the month (because everyone loves filling out another expense report) and then mail or fax it off to the company. A week or so later you would receive a check in the mail for the approved expenses.

Approved expenses is where everyone falls short though.

Money Magazine actually listed a “trick” with FSA’s (or Flexible Spending Accounts are their 76th (out of 100) top 100 annual money moves for 2009 and here it is:

Best Sly Money Move you Don’t Know About

If you’re leaving your job this year and have a flexible spending account (FSA) for health-care expenses, listen up. Let’s say you agreed to contribute $3000 to your FSA in 2009 via payroll deduction. You would have put in only about $1000 by now. But thanks to the quirky rules governing the plans, you’re eligible to be reimbursed up to the full $3000 for the expenses you incur before your last day on the job. To be safe, file all claims by the time you leave.

What’s that mean in plain english? If you’re on the downsize list for your company or department for the next quarter (or you just have a bad feeling) you might want to use up your maximum contribution limit to your Flex plan now. You could actually turn out ahead. You’ll have only paid in to the point of what you’re paycheck deductions are to this point in the year, but you’re able to spend up to the full year’s calculated savings. And if you’re downsized then they’re not going to deduct that amount from your paycheck anymore. (Most companies who run flexible benefits programs simply recover those costs from expired benefits after the year, since unlike Healthcare Savings Accounts or HSAs Flex account funds are only good for one year and then relinquished).

If you’re thinking of feeling guilty, well #1 you’re not breaking any rules (after all this tip was published in a major financial peridicial) and #2 who’s looking out for you these days? It has to be you.

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