Carefully plan for next year’s out-of-pocket health, dependent care, parking and transit expenses.
Estimate your annual medical expenses prior to enrolling in a flexible spending plan. Take a look at this year’s health expenses, especially prescriptions, to estimate health expenses for the upcoming year. You can include unreimbursed expenses for spouse and dependents! Don’t forget day-care and qualified eldercare expenses also qualify for these tax-advantaged plans
Remember, you will not get your unused account funds back if you do not spend them in your plan year so… anticipate future expenses carefully.
Tip: Try to anticipate regular, predictable expenses like office and prescription co-pays and dependent care expenses. Ask your drug store Pharmacist to run a total of your prescription medicine purchases for the year.
Complete a plan enrollment form and indicate how much to deduct from your paycheck.
The annual dollar amount you determined is evenly divided by the number of paychecks you receive… then deducted from your paycheck and deposited into the accounts you choose to open. This money you’ve set aside in your accounts is untaxed. The funds in your accounts are used to repay yourself for out-of-pocket expenses not covered by your regular health insurance and dependent care expenses, or parking and transit expenses.
3. Get Your Money Back!
Simply submit a completed Reimbursement Request form for qualified expenses with receipts to ABS.
Watch how quickly your own money returns to you… in untaxed dollars.
But there’s more good news… because you’ve set aside money into your accounts on a pre-tax basis, your gross taxable paycheck is lowered by that amount. This means your employer will be taking out less federal, state, local, Medicare and Social Security taxes… so your take-home income goes up. The increase may look small at first, but over the year it just keeps adding up. It’s like getting a bonus in every paycheck.