I can’t believe the time has come once again. The time to re-examine insurance plans, FSA (Flexible Spending Account) elections, premium payments, (to name a few). The time we call……..open enrollment.
The other day I received a nice, chunky package from our payroll company. This package contained information regarding our FSA open enrollment, which begins on November 1st. As I sent out the e-mail to our staff regarding the benefits of FSA, I thought of the people who elect not to participate in the plan because they don’t fully understand how it works.
A Flexible Spending Account (FSA) allows you to withhold money from your paycheck on a pre-tax basis to pay for unreimbursed medical expenses and dependent care expenses. An FSA works very simply. Forecast your 2009 out-of-pocket medical, dental, vision, and/or dependent care expenses. You decide the amount of your salary that will be set aside each payday. That amount is automatically deducted from your paycheck and goes into a personalized medical/dental or dependent Flexible Spending Account. You may be issued an FSA debit card to use for expenses (if your company’s FSA plan has this feature) or continue to pay for your out-of-pocket expenses, and the plan reimburses you for eligible costs from your FSA account.
When you are forecasting expenses for the 2009 plan year, be aware that an FSA has a “use it or lose it” rule. For example, you elect to put aside $1,000 (total for the plan year) and your expenses at the end of the year total $800. If you don’t use the remaining $200, you forfeit and lose that amount.
If you currently participate in an FSA, good for you!! Your 2008 plan year election will carry forward into the 2009 plan year. You need to take action only if you are changing your annual election or ending enrollment for the 2009 plan year.
For those who don’t currently participate, I urge you to get as much information as possible, and review it thoroughly. If you are not quite sure, please don’t hesitate to ask questions. Chances are you are not alone in the quest for answers.
Good luck with your open enrollments!