Saving money, on the Government's dime!

If you've never heard of a "Flexible Spending Account" or FSA, it's something you need to ask your company about, if you live in the United States.

Quite simply, what this plan does is allow you to spend money on medical and related expenses with money that is deducted from your paycheck, pre-tax.

If you make $1,000 and you have $100 taken out for your FSA account, then you will only be taxed on $900.

This impacts you significantly in two ways;

1) It puts more money in your pocket to pay for medical and other health-related expenses because that $100 (in the example above) did not have any tax taken out of it. That's more money for you!

2) It reduces your taxable income, which means you get taxed less, which means more money for you!

What can you spend this money on? From doctor visits to braces to many over-the-counter medications, the list is long.

There is a catch though. You have to make an election at the beginning of the year as to how much money you want withdrawn over the course of the year. If you don't end up using it, you loose it.

Now I've been using an FSA account for years and have never lost more than a buck or two. It's very easy to use it up, especially if you plan ahead. If you know you're going to need a doctor visit or two, some medications for colds, some dental work, etc., then you're all set.

If you're employer doesn't sponsor an FSA account, ask them to do so. All it costs them is a very small maintenance fee for each employee that participates since it's completely maintained by a third-party administrator. Your Benefits person will definitely know about it.

Here's a few links for more information if you'd like to read more about it:

https://www.fsafeds.com/fsafeds/index.asp
http://en.wikipedia.org/wiki/Flexible_spending_account