Why should I use a Flexible Spending Account (FSA) if I already have a savings account?
I’ve heard this question many times from my clients who want to stretch their income as far as it will go. If you’re looking for ways to make your income stretch further and you expect to have medical expenses in the next year, Flexible Spending Accounts, or FSA’s, are a great tool to consider.
How an FSA Works
FSA’s allow users to funnel part of their income from their paycheck directly into the account BEFORE taxes are taken out. As the account grows over time, the user can spend those funds on approved medical expenses and pay less in taxes.
If you expect some medical expenses in the next year, it’s wise to set aside some of your income specifically for those costs. This way you avoid paying taxes on that designated portion of your income. Depending on how much you contribute, this can add up to significant savings.
One thing that is important to understand is that the funds a person puts into an FSA expire after one year. These accounts are not meant for dodging taxes indefinitely. You will have to choose the amount you want to withhold annually. If you are considering using an FSA, be sure to understand the benefits and limitations of this product.
Schedule a Time to Chat
There are many different products available in the healthcare marketplace, and they change often. If you have any questions or begin to feel overwhelmed by the options, you can always reach out to me for more information.
Schedule a time to chat about your options and what fits your situation best today!
