How do I contribute to my FSA?
You’re almost ready to start saving on eligible health expenses thanks to a flexible spending account (FSA). Once you’ve confirmed with your employer that they offer an FSA, all you need to do is fill out some forms and submit them to your HR department.
When your account is set up, your next step is to contribute money that you can spend on eligible expenses. There are lots of eligible medical, dental and vision care expenses you can use your FSA account on.
For example, if you’re buying vitamins, if your tooth needs a crown or if you want a new pair of reading glasses , your FSA can save you serious money.
Here are some restrictions you’ll need to be aware of before you start using your FSA account.
How much can I contribute to my FSA?
While FSAs can be very helpful in paying for health care expenses, there’s a limit to how much money you can contribute annually.
The IRS typically releases the following year’s limit each October, so you’ll know how much you can contribute going into the new year and can plan accordingly.
In 2019, the FSA limit was $2,700. Typically the IRS raises the limit by $50 each year, so you can plan on 2020’s limit to be in the same ballpark.
When can I contribute to my FSA?
This is the most important information to remember about your FSA: You can only set your contributions at the beginning of your benefit year, and they can’t be changed.
The day your FSA plan takes effect is the beginning of your benefit year -- meaning you’ll be covered for the next 365 days from that date. Before that date hits, you’ll need to specify the total amount you would like to contribute to your account for the entire year.
The amount you specify will be automatically deducted in equal installments from your paychecks. You’re not able to change that amount from month to month, and if you don’t use the entire amount by the end of your benefit year, you may lose it entirely.
All of this is to say that contributing to your FSA takes planning. You’ll need to know your expected medical, dental and vision care costs for the year ahead. This can be a lot easier than it sounds if you have predictable expenses.
How can I determine how much to contribute to my FSA?
Once you figure out how much your insurance will cover for these expenses, you can take the remainder and contribute that toward your FSA for these eligible purchases.
Your FSA account can also help you pay for visits to the doctor or specialists. Your insurance card probably lists a copay -- that’s the amount that you’ll have to pay out of pocket for each visit.
If you know how many times a year you’ll make office visits, you can set aside the added costs of each copay and deposit it into your FSA.
If you plan on contributing the entire 2019 FSA limit amount to your account, that’s an average of $225 each month coming out of your paycheck. The good news is that on day one of your benefit year, you have access to the entire amount you’ll contribute to your FSA by the end of the year.
What this means: If your benefit year kicks off on January 1, and you have LASIK surgery on January 2, you can use the full $2,700 to cover expenses -- or however much you’ve elected to contribute for the year.
With your FSA account contributions set ahead of time, paying for expenses to keep you healthy becomes less of a hassle. Schedule an eye exam today, and start enjoying the benefits of your FSA account!