Ask Penny: How Should I Calculate My FSA Election for Next Year?
September 12, 2018
With the beginning of Open Enrollment season, it may be helpful for potential FSA enrollees to consider some key questions to assist them in accurately projecting their annual FSA or Limited FSA election for 2019.
Since an FSA or Limited FSA is a “use-it-or-lose-it-plan” under IRS rules, it is important for a participant to not over-elect and potentially forfeit funds at the end of the plan year. However, it is equally important to maximize the pre-tax benefit and not underestimate either. Although the adoption of the FSA carryover rule in recent years has made the benefit more attractive to potential enrollees, it is still important to be as accurate as possible when deciding an election amount.
Here are some important questions for potential FSA enrollees to consider when calculating their election for next year:
How much money per month do you or your family spend on maintenance medications? If you typically use a particular pharmacy, it can be helpful for you to physically go to the pharmacy and request a printout of all prescriptions that have been filled over the last year for you and any minor dependents. Any adult dependents or spouses typically have to request their own printout due to HIPAA laws.
What is your annual health insurance out-of-pocket maximum for the upcoming year? Do you have any upcoming scheduled procedures? Ask the benefit specialist in your HR department how your 2019 health benefits will apply to the upcoming health services. If you haven’t had any one-time services over the last year and you think the past year is representative of what you might spend this upcoming year, call your health insurance company or login to your health insurance account to see how much of your out-of-pocket maximum you or your family has satisfied. Be sure to add any monthly expenses you know you will incur for the remainder of the year.
Do you, your spouse, or any of your adult dependents need new eyeglasses or be getting braces this year? If so, be sure to check out how different payment options can affect how you claim the funds through your FSA or Limited FSA. (Remember for FSA, your dependent also has to be your tax dependent, not just your benefit dependent.)
Are you or your spouse enrolled in a qualified High Deductible Health Plan? If so, there are special rules that do not permit you to enroll in a medical FSA. However, you are still able to contribute to a Limited FSA (which only reimburses vision and dental expenses) if your company offers a limited FSA benefit.
Here are some additional resources to help employees with FSA election decisions: