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Health Care Reserve Account

Old 12-05-07, 11:13 AM
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Health Care Reserve Account

So my wife has a health care reserve account through her work and we were talking about it the other day. Basically $1000 comes out of her paycheck, tax-free over the course of a year. She can submit reciepts for various health-care related items (including toothpaste it turns out) and then gets re-imbursed from the $1000k, basically making $1000 worth of our health care tax-free. When I first heard about it I thought it was great. But now she's scrambling to find things to re-imburse because if she doesn't use the full $1000 by April, she loses it! I had heard my boss talking about it too so I asked him as well, and his is a use-it-or-lose-it situation too!

How can they do that? This is our money that we earned and basically "loan" the government. In exchange we get to use it tax free for certain things. But then at the end of the period they just take the balance?!? At the very least it should roll-over, or be taxed and given back to us... not stolen by the government.

I guess its lucky that I have dental work that needs done before April. That should eat up whatever balance we have.
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Old 12-05-07, 11:17 AM
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That's crap, many HSAs consider it "your" money (which it is), in which case if you don't spend it - it rolls over.

It would seem like that'd be the sensible way to do things, otherwise you're just encouraging people to spend $1k per year on 'healthcare'.
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Old 12-05-07, 11:18 AM
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Maybe there are different plans. My wife had to use hers up by the end of the year.
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Old 12-05-07, 11:20 AM
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i've always heard you have to use it up.


people always suggest contact lens solution but i'm not sure you really need to stockpile that much of it
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Old 12-05-07, 11:33 AM
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Originally Posted by Venusian
i've always heard you have to use it up.


people always suggest contact lens solution but i'm not sure you really need to stockpile that much of it
Especially if you don't wear contacts!
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Old 12-05-07, 11:37 AM
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HSA is a permanent account

FSA you lose any unspent money. of course if you have older family members who need things like blood pressure machines or glucose testers you can think of them this holiday season

or just buy up a lot of condoms since you can use the FSA for it
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Old 12-05-07, 11:39 AM
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Originally Posted by al_bundy
or just buy up a lot of condoms since you can use the FSA for it
now that's thinking
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Old 12-05-07, 11:42 AM
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What do FSA and HSA stand for? Other than permanent vs. use-it-or-lose-it what are the differences? or is that dependant on the company? Is the HSA more strict in what you can and can't use it for?
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Old 12-05-07, 12:02 PM
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Your wife's is a flex plan. You have to use it or you lose it. Of course they are a lot more liberal with what you can spend it on, so go get some massages or something.

Her HR dept. probably should have explained things a little better when she signed up.

They are good in years when you can anticipate a lot of medical expenses.
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Old 12-05-07, 12:05 PM
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An HSA is a Health Savings Account. I don't know all of the details, but basically it is a very high deductible plan, but your premiums are held in an account for you and you can invest the $ in the market. Or something like that.
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Old 12-05-07, 12:36 PM
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The way a flex medical plan was explained to me is that it would be beneficial if you had recurring monthly costs, such as prescriptions. I believe our plan maxes out at $1000 per year so if you estimate that you will spend $500 in a given year then you can opt for that instead of the max. Our flex medical plan is use it or lose it too.
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Old 12-05-07, 12:53 PM
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Like a lot of things - health care reserve accounts can benefit some people.

Some people shouldn't even consider them.
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Old 12-05-07, 01:15 PM
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Can you buy spa gift cards with it? That way you can buy them now and get massages next year when you need them.
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Old 12-05-07, 01:52 PM
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So is the use-it-or-lose-it status of the flex account set by the IRS or by my wife's company? I need to look over her information and see what I can find out.
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Old 12-05-07, 02:17 PM
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I don't think the IRS has anything to do with it, other than allowing it to happen.
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Old 12-05-07, 02:49 PM
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Oh I see... so it isn't the government keeping the money, it is my wife's company? That still isn't right to me.
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Old 12-05-07, 03:38 PM
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Likely it is the insurance that is keeping the money. Seems justified to me since plans like these allow people to get services, which would not normally be covered by their insurance, tax-free. It's up to the employee to put the appropriate amount in the plan and manage it.
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Old 12-05-07, 03:43 PM
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If your plan's like mine, you can use it to pay for OTC medications. I still need to use about $50 of it, so I plan to hit Wal Mart and buy cold remedies and stuff like that for the winter. Heck, I might even spring for name brands.
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Old 12-05-07, 04:13 PM
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I'm signing up for the one at my company for next year because of some major medical bills that I anticipate.

One thing with the flex accounts that I have found out is that the risk goes both ways. What that means is that if you say you will set aside $2000 for 2008, and you submit the claim in February and use all of the money, you will have a negative balance in the flex account. If you are let go from the company with a negative balance, the company cannot recover it per the IRS. The company also assumes risk with these types of accounts.
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Old 12-05-07, 04:20 PM
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ours use to be use it by the end of the year, or lose it
with small kids, thats never an issue.. and corrie is good about submitted for all medicine (OTC of prescription).
at the end of the year, she uses up anything left on a bunch of contact lenses

but they changed the policy this year, and give you the first 6 months of the new year, to continue to use up the money from the previous year.. but if you arent careful, that could mean you eventually have ALOT to use near the end of the year
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Old 12-05-07, 04:49 PM
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Yeah. Ours can be used for OTC stuff as well. We aren't in danger of losing anything as long as my wife remembers to send the reciepts in. And I didn't know that the company can't re-coup any of the negative balance stuff if you leave/get fired... so it isn't as bad as I thought.
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Old 12-05-07, 04:51 PM
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Originally Posted by C-Mart
Yeah. Ours can be used for OTC stuff as well. We aren't in danger of losing anything as long as my wife remembers to send the reciepts in. And I didn't know that the company can't re-coup any of the negative balance stuff if you leave/get fired... so it isn't as bad as I thought.
My plan actually issues me a debit card that I can use. At major retailers like Wal Mart, I don't have to turn in any receipts because it electronically monitors what I'm buying and will reject the sale of any item that isn't covered by the plan. Cool beans.
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Old 12-05-07, 06:01 PM
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Originally Posted by Vibiana
My plan actually issues me a debit card that I can use. At major retailers like Wal Mart, I don't have to turn in any receipts because it electronically monitors what I'm buying and will reject the sale of any item that isn't covered by the plan. Cool beans.
My boss's is like that as well... we'll have to check into it. Can you use that card to pay co-pays or for crowns at the dentist? or just OTC stuff?
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Old 12-05-07, 06:34 PM
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If it's an FSA Flexible Spending Account, use it or lose it. That's part of the "deal." The good news is that lots of things are eligible for reimbursement--I've gotten reimbursed for Pepcid, prophylactics, glasses (frames and lenses) copays, etc.
We have the debit card as well. Very convenient, especially since we are supposed to order prescriptions by mail/website. The works most places except things like BJ's, but I still keep the receipts until the expense is verified/approved.
I thought it was an IRS stipulation that if you don't use it in the alloted time it's gone, but I don't know who "keeps" the money.
Ours is extended to be eligible on purchases through March 31.
I do like the fact that unlike the Dependent Care FSA, you don't have to have actually contributed the money to use it or get reimbursed.
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Old 12-05-07, 07:20 PM
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This is a world event?

Well, I'll make it political....I'm opposed to my FSA - I don't take it.
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