Wednesday, February 9, 2011

Why I love my healthcare spending account

What a concept! A program that allows you to put aside your own $$, tax-free, to reimburse yourself for copays and other medical and dental expenses you incur! Seems a little like free money to me, but somehow this program has survived essentially intact and without additional taxation.

I've been participating in the program for about 5 years now. At first I noticed the extra dollars not being in my paycheck. Not so much any more. My insurer has partnered and does a direct-billing thing, so my MD visit and prescription copays are automatically refunded to my checking account. How convenient!

Here's the really great part, at least I'm appreciating it right now -- they reimburse for large dental expenses -- like a root canal -- which even dental insurance usually does not cover. I can understand why -- the need for a root canal usually means you just ignored your teeth for a long time so why reward someone who needs one?

I really did not ignore my teeth. I go in at least once a year , usually twice for the X-rays and cleaning. I plan to get the x-rays from my September visit to see whether these guys just flat missed the problem. I can't imaging that the tooth blew-up under an apparently OK filling in just 4 months. Baffling to me.

Anyway, I was thrilled to find out that this will not be a huge hit to me financially. The icing on the cake is that they will also reimburse me for the nitrous oxide I was sucking during the procedure. I believe the oral surgeon was happy about my choice as well -- I tend to be a bit anxious when people are messing with my teeth, so he didn't have to put up with my grimaces and white-knuckles either.

If you are employed, find out if your employer offers a health care spending account program. It is at least a two-fer -- lower income tax and reimbursement for costs your insurance does not cover. There is a catch -- you lose any funds you put into the account that you do not use during the year. Example, if you participate by having $25 taken from each 2-week paycheck, you'll put away $650 dollars toward your medical expenses and reduce your taxable income by $650. If you only claim $625, the other $25 will not be returned to you, as it was not used for its intended purpose.

Good planning and record-keeping will prevent that loss. In addition to the medical and dental, it will reimburse for new prescription glasses and some other personal care expenses. Each program is a little different, but in general reimburses for all of these things. Filing requires copies of receipts, a statement of what you paid for (usually the billing statement is enough) and a simple form. If you are high-tech, this can all be done electronically.

Again, with a little planning this is a great deal. Thus far in 5 years, I have run out of Health care spending account funds before I have run out of year.

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