Flexible Spending Account

[Trixie007]

Ok, so in regards to the discussion on my medical bills in another thread... We have a tax return that we are trying to "spend down" and I have a few outstanding co-pays/coinsurance from last year, pending bills from my surgery last week, plus we want to have basic dental work done, and DH & DD need their eyes checked and new contacts. So...

We have a flexible spending account (FSA) that automatically reimburses us for our out of pocket medical expenses - we put $70 every two weeks into the account. If I allow the auto reimbursement to take place, we will use up the entire account in the first 3 months of the year (70 x 26 = 1,820) since we can be reimbursed these funds even before the actual contribution is made! This means that for the rest of the year we will still have the $70/check coming out, but all medical co-pays will be out of our pocket.

So... I'm thinking about stopping the auto reimbursement (just realized I could do that!) and selectively paying for things, and selectively submitting for reimbursements manually.

For example:
Vision - pay but don't get reimbursed
Dental - pay but don't get reimbursed
Dr. co-pay & coinsurance - pay & get reimbursed
all others (lab, hospital, other separately billing providers)- don't pay (IIB) and don't get reimbursed - there may be some that I will want to pay, but I won't know until I get them
last years bills - IIB

This would allow us to spend down some of the tax return (dental/vision), pay the Dr that I want to keep going to, and still have some of our FSA account available to be used the last 9 months of this year after we file.

Does anyone see a problem with any of this? Will it look funny to IIB some medical co-pays if we still have FSA funds available to us? (btw, this is not an asset)

Thanks!

[Trixie007]

any takers? also, it occurred to me, if I pay a medical bill over $600, is that a preferential payment or is that just for cc's etc.?

[happy_ira]

Curious: Are you deducting the FSA bi-weekly deductions (that come out of paycheck) from your income on Means Test or Sched I/J?

I was told by my atty that FSA should NOT be deducted because you would be "double dipping" by subtracting it from income and then again subtracting the healthcare expenses.

Just a thought.

[Trixie007]

Curious: Are you deducting the FSA bi-weekly deductions (that come out of paycheck) from your income on Means Test or Sched I/J?

I was told by my atty that FSA should NOT be deducted because you would be "double dipping" by subtracting it from income and then again subtracting the healthcare expenses.

Just a thought.

And it's a good one. On the means test we used the federal standards of 54/person -and did not include the FSA cont. -- on Schedule I/J we used the actual FSA contribution, which averages to 152/mo and did not use the standard deduction.

Although, looking at the last two years, I could put the out of pocket medical much higher and proved it, maybe 300-350/mo - but we don't need to in order to qualify, so I'm doing it the simpler way.