Following up on the HSA post someone made earlier, FSAs (Flexible Spending Accounts) re an optional medical thing some employers offer. They are never a replacement for insurance, but are intended to be supplemental.
They're a temporary use-it-or-lose it fund you pay for (and your employer can but probably wont contribute to) with a current maximum contribution limit of 3200 (some funds alow limited rollover, but it's capped by law, and not required) that you can use to cover some medical expenses insurance wont cover. That's a bunch of stuff, but the big ones are these:
- Deductibles: The amount of money you have to pay out of pocket before insurance will spend a penny to help you.
- Copays: Flat fees you might have to pay out of pocket per medical proedure or bill .
- Coinsurance: A percentage of a medical bill that insurance requires you to cover (20% coinsureance means you pay 20% out of pocket and they pay 80%.
- Some prescription meds.
- Dental
- Not sure about vision
You can choose at the beginning of the year how much money you intend to put into your FSA, and then your employer deducts an amount from each paycheck to fill that fund. This money is non-taxable going in and out, which is the primary form of savings.
The catch? Twofold:
- As mentioned, it is use-it-or-lose-it. The employer pockets what you can't rollover.
- You have to guess how much you will spend by how much you're declaring at insurance re-up time. Under or overguessing leaves money on the table.
- If you are terminated , whether you get fired, quit, or get laid off, the employer keeps everytjing you've put in. I lost 1200 dollars this way is how I know. I don't recall how this interacts with COBRA, but you can't afford COBRA anyway.
So how can you make this shit deal possibly wothwhile? You can use ALL of it up front. So if you just started and you've gotten one paycheck and have FSA and put in 5 bucks, you can INSTANTLY use the ENTIRE amount of your election. So if you elected for max FSA, you can get a 3200 dollar procedure done on day 1, and the employer pays it all, even if you haven't paid anytjing in yet. Once that's done, if you quit or get fired, they cannot come to you to cover what you haven't paid in yet. That's money they spent that they can never get back.
So if you have a covered procedure that you know you need done, you can fuck over an employer with this one cool trick. Capitalists HATE this. But mind that it will probably take some time to get your appt scheduled and your procedure done, so you might have to work until that happens.
The other cool thing about this: It covers dental expenses INCLUDING ORTHODONTICS. For those of you who havent been working long, insurance that covers ortho is unicorn territory. In an ideal scenario, you get hired, FSA kicks in, you call to get an appt and get in the next day for an ortho consult, buy the high end ortho they are offering (make sure to get them to bill it all up front), then quit and get ortho for free.
Is it worth it if you plan to stay at a company? That's complicated and highly individualized, but youre bound to need at least some small amount even if it's just for a physical, assuming you dont forsee getting fired. If you're young and healthy and wear a fucking n95 lile you should, you probably don't need to risk FSA at all. If you have rollover (ask HR of you do), that might be worth going up to if you're not sure, since you get 2 years of coverage then, assuming you stay employed.
3 reasons to work a random job
- Salting
- Skill stack / learn how a sector works
- This health insurance trick
I used to manage FSA accounts and they literally turned me into a socialist.
So how can you make this shit deal possibly wothwhile?
You dont pay income or any taxes on your FSA because its not "your" money. Its still your employers. But they can still write it off as expenses even though they can claim it again at the and of year. HRAs and FSAs were really common tax evasion schemes that doubled as employee benefits programs before we had real health insurance. They all got grandfathered in at some point into tax law. Section 216 of some tax laws is FSAs.
Also you can pay for basically anything from a pharmacy with an FSA. Q-Tips and condoms are fair game.
Nah, but you might've gotten away with it if no one audited you. But allegedly they tightened regulations since then so now you can't even buy band aids.
Depends on when those linear muscle massagers hit the shelves and when they tightened regulations, but you totally could've back in the day. No one was really auditing your FSA card when Obama was president.
I thought they tightened up the rules on what you could get with FSA. Because I had one when you could burn the excess on bandaids, but then got rid of it one year when they said they were gonna disallow a bunch of pharmacy stuff.
At any rate, it was one more layer of nonsense where they would challenge actual doctors visits and stuff.
My experience was from a decade ago so if you can't buy Band-Aids with your FSA anymore then you certainly can't buy qtips and condoms. To me this means there's less of a reason to get an FSA. You're risking losing thousands of dollars to save some hundred on taxes.
I remember there being some tightening a few years ago, but I just looked it up and bandaids are still fair game. Things probably go back and forth a bit, and I'd just warn to do a quick search for any item you're charging to it.
it was a minor aside in your post but COBRA always seems like the silliest thing for me. maybe it made more sense pre ACA, but is there ever a situation where it's better than getting something off the marketplace?
COBRA continues the coverage one had prior to losing/leaving one's job. There are probably cases where keeping specific coverage is important, but they should be rare.
Enrollment is only allowed a few times a year in the ACA marketplace.
So, if you've got the savings and a chronic medical condition that your previous insurance was already paying for, you might NEED to buy into COBRA to cover the gap between "now" and the next open enrollment period. Unless your savings was enough to cover your medical costs (and your providers aren't being dicks about being paid by a person instead of an insurance company.)
But if you're losing your coverage by losing your job, isn't that a qualifying life event that lets you enroll immediately? I didn't wait until November to get new insurance after losing my job in July.
(Good, I hope I'm mostly wrong then.)
This might be technically true, but with a lot of the ACA stuff being run individually by each state there's no guarantee that something somewhere won't immediately kick you off of your current insurance and then you'll be in a state of limbo where everybody is telling you to talk to everybody else to figure out what to do.
It also wouldn't surprise me if there's a lag time between, starting the ACA onboarding process and actually getting coverage that you can use that can leave a person uninsured for some period of time.
Hopefully this isn't what happens in the majority of cases, but when it does happen is probably going to make people who already have lots of issues to deal with suffer a great deal more.
aren't you glad I saved you from a public option?