FSA & funding question

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Topic Author
jeremyl
Posts: 187
Joined: Sat Dec 20, 2014 8:38 am
Location: Indiana

FSA & funding question

Post by jeremyl » Mon Dec 18, 2017 12:46 pm

My wife and I will be expecting our first child in 2018. When this new change happens, I believe I'll be able to set up my FSA account with my employer. I saw that the contribution limits for an FSA is $2650 in 2018. My question is this; is it safe to assume that we will most likely spend $2,100 on doctor visits and all with a new infant and all of the care it will need during the year? I can carry over $500 in the account into the next year.

I still have to look at all of the expenses that our FSA will cover. Is an FSA invested in mutual funds? If so, what would be the best funds to look for in an FSA?

Thanks!

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Bruce
Posts: 355
Joined: Fri Mar 02, 2007 8:02 am
Location: Alaska

Re: FSA & funding question

Post by Bruce » Mon Dec 18, 2017 12:55 pm

Congratulations on the new baby coming soon!

Suggest your go for it with the FSA.

It all depends on how good your other insurance is, but even with very good double coverage I HAVE NEVER had a carryover on my FSA account, and find it a good way to leverage spending power of my health care dollars at a pre tax rate.

You can also use FSA for the parents dental expense, dr visit copay, drug copays, and many other health related expenses not fully covered by your other insurance coverage. So it is not just the baby related medical expenses to consider.

I have never seen mutual funds related to enrolling in a FSA account, in my experience with three different plans with three different employers, all have been a reimbursable fixed dollar account.

Cheers
Bruce | | Winner of the 2017 Bogleheads Contest | | "Simplicity is the master key to financial success."

ShowMeTheER
Posts: 424
Joined: Mon May 24, 2010 9:12 am

Re: FSA & funding question

Post by ShowMeTheER » Mon Dec 18, 2017 2:08 pm

1) FSA's are not invested so no mutual funds to worry about
2) Your post-birth infant costs don't have to be all to expensive and with any luck they will not be. The big ticket item is the birth itself. Your out-of-pocket spend depends on your plan, but in majority of cases you'll carry enough of an out-of-pocket responsibility that maxing out your FSA is the right move (and additionally thanks to the fact that you have the $500 carry over).

So, I agree go for the max unless you have a very, very rich plan that would alleviate your cost burden for the birth event.

rkhusky
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Re: FSA & funding question

Post by rkhusky » Mon Dec 18, 2017 2:24 pm

Many insurance plans provide 100% coverage for births. You need to check your plan for coverage. There are also prenatal visits and postnatal visits, but these are often covered 100%, as well as well-child visits. Thankfully, our family has always been healthy and we have reasonably good insurance. We only maxed our FSA when 1st child had braces. Before braces, we usually set FSA at approximately $1200. You can also use FSA for vision exams and glasses, contacts and laser surgery.

Unhandled
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Re: FSA & funding question

Post by Unhandled » Mon Dec 18, 2017 2:35 pm

$2100 sounds like overkill. I would start with a much lower amount. If you use it all up, then you adjust up the next year.
No, FSA's do not invest in mutual funds or anything else like that. It's just a static account.

I have four children all under eight years old. I error on the side of having too little in my FSA (I don't want to "lose" any of it)(yes I can carry over). I usually do about $500 each year. Some years we struggle to spend it all. My insurance has a $20 copay visit, and most "well baby" visits are 100% covered (no co-pay).

nerdymarketer
Posts: 134
Joined: Mon Sep 02, 2013 8:18 pm

Re: FSA & funding question

Post by nerdymarketer » Mon Dec 18, 2017 5:11 pm

Check your insurance. Many cover 100% of delivery (assuming no complications) + well baby checkups, so it can be surprisingly few out-of-pocket $$.

My memory is hazy, but I'm guessing we barely cracked $700 FSA eligible expenses per year over the past three years and we had two kids during that time. I'd have to check to be sure though...

spammagnet
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Re: FSA & funding question

Post by spammagnet » Mon Dec 18, 2017 5:37 pm

Remember that the benefit of the FSA is limited to your marginal tax rate on the amount withheld. If you don't spend it all, you lose 100% of the remainder. It's better to underestimate and get some benefit than to overestimate and lose more than you save.

Topic Author
jeremyl
Posts: 187
Joined: Sat Dec 20, 2014 8:38 am
Location: Indiana

Re: FSA & funding question

Post by jeremyl » Mon Dec 18, 2017 7:42 pm

Thanks for all of the replies. I spoke with my benefits manager. Each family member has a $1,000 deductible that is supposed to be met before insurance covers the rest. I looked over some information on the anthem site (my account) and it looks like it says the $1,000 deductible; then it looks like the insurance covers 90% & we cover 10% co-insurance. The example on the plan breakdown showed we would be paying 10% of a pregnancy. I couldn't tell if we'd still pay that if we met the deductible or not. Also, there's a part that talks about out of pocket expenses & for our family plan it's a max of $4,000.

I think the deductible, out of pocket expenses, and co-insurance numbers are what confuses me. Not sure if we pay the deductible until it's met (I was going to guess with all of the prenatal visits we might get to that-never been through this before so I'm really green to all this). Will we pay the $4,000 out of pocket? Depending on those numbers will we pay the 10% coinsurance? We expect to do everything in the network of providers. I think we can find quality care from what I've been told.

I hope everyone could follow that.

Kazeflame
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Joined: Wed Apr 26, 2017 5:48 pm

Re: FSA & funding question

Post by Kazeflame » Wed Dec 20, 2017 1:09 am

Each insurance plan can be vastly different, but you usually pay the full deductible before your insurance coverage kicks in. For example, your individual deductible sounds like it is $1000, meaning a single person would pay out of pocket for services such as procedures, imaging, and labs before the insurance kicks in at what sounds like 90%. After the first $1000 you will only have to pay 10% of each service.

The out of pocket maximum is the limit that you would have to pay before your insurance coverage is increased (usually to 100%).

For example, if you have multiple people on your insurance plan, and your deductible is $1000 per person, and your out of pocket maximum is $4000

CASE 1

Person A accumulates $2000 in fees

The first $1000 goes towards the deductible, then Person A is responsible for 10% of the next $1000
Out of pocket is $1100

CASE 2
Person A accumulates $1000 in fees
Person B accumulates $1000 in fees

Both individuals fulfill their deductible. Any further expenses for either of them are covered by the insurance at 90%
Out of pocket is $2000

CASE 3

Person A accumulates $1000 in fees
Person B accumulates $1000 in fees
Person C accumulates $1000 in fees
Person D accumulates $1500 in fees

All 4 individuals fulfill their deductibles, which makes $4000 out of pocket. The final $500 for Person D is 100% covered by the insurance
Out of pocket is $4000


Hopefully that helps.

A couple of definitions

COPAY - A flat amount you pay for your visit or service
COINSURANCE - Your share of the cost of a service (sounds like 10%)
DEDUCTIBLE - The amount you pay upfront before your insurance coverage starts
OUT OF POCKET MAXIMUM - The total amount of out of pocket expenses you will pay before your insurance coverage increases (usually to 100%).



Now on to the FSA, like as was mentioned before, you have to be mindful that most preventive visits are covered 100% thanks to the Affordable Care Act. This relates to annual physicals for yourself as well as well-child visits. Any necessary screening labs, as well as immunizations, are covered as well. For these types of visits, you will likely not have a copay, or coinsurance (meaning nothing out of pocket).

That being said, you have quite a high deductible, so if you or anyone in your family is sick enough to require lab testing or imaging, you may rack up expenses quickly, which you can use your FSA for. In all honesty, if your new infant is healthy, you likely won't spend too much money on the well child care.


The OTHER thing to know though is that an FSA can be VERY broad in it's coverage if you know how to get things covered. Check with your FSA provider, as some of them have a good website explaining what expenses are covered. My FSA provider is WAGEWORKS and they have this page available

https://www.wageworks.com/employees/sup ... ses-table/

Most people think that FSAs are primarily for copays and coinsurances, but they can also cover a lot of other expenses like:

vision costs (new glasses, contacts, contact solution)
dental costs
sunscreen (or anything with a certain SPF level)
Lasik
Braces
Condoms
Mileage to your provider
Parking at your provider's office

If your doctor is ok with writing you a letter of medical necessity for a specific problem you can also get other things covered like:

Gym membership
Exercise equipment (bike, elliptical, activity tracker)
Exercise classes
Massage therapy
Supportive Mattress
OTC medications
Air Purifiers

Granted you have to have a medical diagnosis that makes sense for you to need something like this, but with the new lower blood pressure guidelines, it should be easy to at least get a gym membership covered. Because of this, I usually put the max in each year. If you can carry over $500 between years all the better.

Hope that helps!

Topic Author
jeremyl
Posts: 187
Joined: Sat Dec 20, 2014 8:38 am
Location: Indiana

Re: FSA & funding question

Post by jeremyl » Thu Dec 21, 2017 11:12 pm

Kazeflame wrote:
Wed Dec 20, 2017 1:09 am
Each insurance plan can be vastly different, but you usually pay the full deductible before your insurance coverage kicks in. For example, your individual deductible sounds like it is $1000, meaning a single person would pay out of pocket for services such as procedures, imaging, and labs before the insurance kicks in at what sounds like 90%. After the first $1000 you will only have to pay 10% of each service.

The out of pocket maximum is the limit that you would have to pay before your insurance coverage is increased (usually to 100%).

For example, if you have multiple people on your insurance plan, and your deductible is $1000 per person, and your out of pocket maximum is $4000

CASE 1

Person A accumulates $2000 in fees

The first $1000 goes towards the deductible, then Person A is responsible for 10% of the next $1000
Out of pocket is $1100

CASE 2
Person A accumulates $1000 in fees
Person B accumulates $1000 in fees

Both individuals fulfill their deductible. Any further expenses for either of them are covered by the insurance at 90%
Out of pocket is $2000

CASE 3

Person A accumulates $1000 in fees
Person B accumulates $1000 in fees
Person C accumulates $1000 in fees
Person D accumulates $1500 in fees

All 4 individuals fulfill their deductibles, which makes $4000 out of pocket. The final $500 for Person D is 100% covered by the insurance
Out of pocket is $4000


Hopefully that helps.

A couple of definitions

COPAY - A flat amount you pay for your visit or service
COINSURANCE - Your share of the cost of a service (sounds like 10%)
DEDUCTIBLE - The amount you pay upfront before your insurance coverage starts
OUT OF POCKET MAXIMUM - The total amount of out of pocket expenses you will pay before your insurance coverage increases (usually to 100%).



Now on to the FSA, like as was mentioned before, you have to be mindful that most preventive visits are covered 100% thanks to the Affordable Care Act. This relates to annual physicals for yourself as well as well-child visits. Any necessary screening labs, as well as immunizations, are covered as well. For these types of visits, you will likely not have a copay, or coinsurance (meaning nothing out of pocket).

That being said, you have quite a high deductible, so if you or anyone in your family is sick enough to require lab testing or imaging, you may rack up expenses quickly, which you can use your FSA for. In all honesty, if your new infant is healthy, you likely won't spend too much money on the well child care.


The OTHER thing to know though is that an FSA can be VERY broad in it's coverage if you know how to get things covered. Check with your FSA provider, as some of them have a good website explaining what expenses are covered. My FSA provider is WAGEWORKS and they have this page available

https://www.wageworks.com/employees/sup ... ses-table/

Most people think that FSAs are primarily for copays and coinsurances, but they can also cover a lot of other expenses like:

vision costs (new glasses, contacts, contact solution)
dental costs
sunscreen (or anything with a certain SPF level)
Lasik
Braces
Condoms
Mileage to your provider
Parking at your provider's office

If your doctor is ok with writing you a letter of medical necessity for a specific problem you can also get other things covered like:

Gym membership
Exercise equipment (bike, elliptical, activity tracker)
Exercise classes
Massage therapy
Supportive Mattress
OTC medications
Air Purifiers

Granted you have to have a medical diagnosis that makes sense for you to need something like this, but with the new lower blood pressure guidelines, it should be easy to at least get a gym membership covered. Because of this, I usually put the max in each year. If you can carry over $500 between years all the better.

Hope that helps!
That was a greatly detailed explanation. Thank you for clarifying that.

So maybe I'll start with putting a $1,000 in for 2018 and see what happens since I can carry $500 over.

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