Consider an FSA for You and Your Family

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I had been enrolled in the FSA FEDS program since before I was a mom, and enrolled in the DCFSA since becoming a mom. Both are offered to federal employees, working parents may be eligible for FSA (flexible spending arrangement or flexible spending account) and Dependent Care FSAs through their employer. I’ve used the Health Care FSA (HCFSA) and the DCFSA to help with taxes and to save money.

The HCFSA covers a wide range of health care products and services, along with some things you might not have considered as “health care”.

The HCFSA and DCFSA work by taking out funds from my paycheck each pay period. When I have an expense I submit receipts online or with my FSAFEDS app or my health insurance provider submits expenses I’ve paid for, and I am reimbursed for those charges, tax free.

How FSA helps your family

When you have kids, there are things you spend money on: bandages for boo-boos, sun screen for summer, and for working parents, childcare. You may as well be reimbursed for those expenses.

My son is a little man of action. The downside of being such an energetic fellow in a growing and changing body are frequent scrapes and bumps. Of course, the co-pays to the pediatrician are covered by the FSA. But so are the colorful and character themed bandages. I bought a colorful set of fancy bandages my son loves (maybe a little too much), and that was covered.

FSA
Photo by Anton on Unsplash

Other items that are covered

Face masks from Etsy? Like my face, covered.

Hand sanitizer? Hands, covered in it, and covered.

Diaper rash ointments? First aid kit? SPF 50 sunscreen for kids? Daycare registrations fees? Preschool tuition? Parking garage fee for the doctor’s visit? Before and After care? All covered by the HCFSA or the DCFSA and reimbursed.

Radon test kits, which I normally see at big box hardware stores, are also reimbursable.

I should mention it does take a while to get reimbursed for DCFSA claims. Unlike FSA claims where the money is reimbursed despite how much I’ve contributed at the time, dependent care waits until I’ve contributed the money.

For example, say I signed up to allot $1,000 to my FSA for the year. In this example, say in January my husband pays our dentist $1000. Although I have not contributed $1000 yet, I will still be reimbursed that $1000, when my claim is approved.

However, the DCFSA is different. Say I pay my child’s preschool $1000 the first week of January for that month’s tuition. First, I must wait until the month is complete, and even then I am not reimbursed the full $1000 until I have contributed $1000. I used to wait until there was a large pot of money in my account, so I could get reimbursed for the whole amount at once. Because for 2021 the DCFSA limit was raised to $10,500, I contributed a significant amount more. So I need to be reimbursed as soon as possible, and now I submit documentation as early as I can.

FSA For Moms

Massages were the luxury health care item for me. That and Ubers to the doctor’s office, and back (covered under Transportation). Yes, once I took an Uber Black to the doctor’s office, surge pricing strangely made it more affordable than the regular Uber. Through most of the year I am conservative with FSA expenses, but towards the end of the year, I start getting creative.

FSAFEDS Health Care FSA covers everyday things. Everyday things like orthopedic shoe inserts bought at the drug store. Recently, it began covering tampons and pads. And of course, it covers over the counter pain relievers, cold and allergy medications and cough drops.

When we were attempting to get pregnant, several of our expenses were covered. I was reimbursed for the pregnancy tests and the “fertility monitor” I called a thermometer. If we had chosen to go a different route, infertility treatments would have been reimbursed. FSAFEDS will reimburse expenses related to pregnancy, childbirth, and breastfeeding.

Tax Savings

I am not a financial or tax advisor. Please seek financial and tax advice from a licensed professional. What I know is that between the HCFSA, the DCFSA and my retirement contributions, I have been able to significantly reduce my taxable income. This is helpful around tax time because with two incomes, we owe money.

The amount I elect for the Heath Care FSA varies from year to year. The maximum election is $2,750 for 2022 and the minimum is $100. There is also a carry over amount, provided I sign up year after year, of $550, so I don’t lose the money I put in. If I know that glasses need replacing, or other known large health care expense is coming, or I’m carrying over money from the previous year, I will elect accordingly.

Normally for the DCFSA I could only contribute $5000. Daycare would eat that up in the first part of the year. FSAFEDS estimated that it would save me $1,500, tax wise. For 2021, the electable amount was raised to $10,500, providing a possible tax savings of $3000. It looks like it’s back down to $5000 for 2022.

FSA
Open Season

Open Season for federal employees is from mid-November to mid- December. Municipal or state employees may have an open season earlier.

Try it out if you’ve never signed up. Maybe start off with a small amount and see if the savings work for your family.

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