Take advantage of cost-saving flex spending accounts
Health System, Marketing and Communications
|Flexible spending accounts can be used to cover health care expenses for employees and their dependents.
By Katherine Ward
Flexible spending accounts can help employees save money in health care and child care expenses, but are vastly underused, U.Va.’s top benefits official said.
In a nutshell, the program allows employees to set aside money from their pay before it’s taxed and use it to pay for uncovered health care expenses or dependent care expenses. The program makes sense, said Linda Way-Smith, director of employee benefits, and those who have elected to enroll in it seem to enjoy the benefits.
“It’s a way to reduce our loss to taxes through planning,” said Jeff Ciucias, clinical programs coordinator and member of the University’s Committee on Benefits.
However, if the benefits committee can’t rouse more employee interest this year, parts of the dependent care flexible spending program are in danger.
Because of Internal Revenue Service rules that govern such accounts, the U.Va.’s program requires greater participation from those who make between $25,000 and $90,000 annually, Way-Smith said. The benefits are clear: You get to spend all the money you put away on health or dependent care expenses — something you spend money on anyway — rather than having to pay a portion of the money to the tax collector. “Free money,” she calls it.
The main thing that prevents employees from enrolling in these programs is lack of knowledge about it. Also, it’s a true “use it or lose it” program, so if you overestimate your costs for the year, you forfeit the extra money that you set aside, Way-Smith said.
However, very few dependent-care enrollees overestimate their expenses, she said. Dependent-care costs are relatively stable – you know how much day care costs per year, and how much summer camp costs.
Health-care costs tend to be less predictable, with the exception of ongoing prescriptions, she said, but if you have money left over at the end of the year, it need not be wasted, “you can order extra contacts, contact solution or over-the-counter medications,” Way-Smith said.
Enrollment in FSA is easy. There is one form to fill out to sign up, and one form to fill out to get money back. Claims are processed within a few days, and reimbursements can be directly deposited into employee bank accounts. To take advantage of these programs, employees must enroll by Dec. 3. For more information, e-mail email@example.com.