Should I fully fund my FSA?

[Wisedog]

With a new insurance from my company in 2015, we are also being offered a FSA. Im not familiar with it, having never been offered in the past. I like the sound of "pre tax money" funding the account. My wife and I are healthy and in our 30s and don't take prescription meds with rare doctor visits in a year. How much should i fund the FSA?

[frugalredhead]

Only put into it while you are going to to use during the year (actually, you have until March 31st, 2016 to spend the 2015 money. If you put in $3000, and you only use $1000, you lose $2000, so do your calculations carefully. You can use it for co-pays (both doctors/dentist visits and prescription drugs), over the counter drugs IF your doctor writes a prescription for it, glasses & contacts, and various other things. Check the IRS's website for info on all that is included. Sounds like you probably wouldn't want to put too much into it, if your healthcare expenses are that low. I put several hundred it for my kids sick visits throughout the year, but otherwise I really only put in money for my husband's contacts yearly, and glasses every few years.

[LittleMissSplendid]

I second only putting in what you will actually use. When I was signing up for my 2015 benefit year I calculated what I expect to pay out of pocket and came up with the following list:

Eye exam for contacts copay
Dental work copay
New glasses
Contacts & solution

Once I totaled up those costs I looked at what I could use those funds for if any of those things end up being cheaper or not needed. I was given a list of things by my benefits department that can be purchased with those funds, so no matter what I can spend that money on something I could actually use.

You can also do a search for calculators that will estimate your tax savings based on how much you put into this account.

[disneysteve]

I just want to double check. Is it an FSA or an HSA? If FSA, then yes, fund just what you expect to use. If HSA, fully fund it whether you expect to use it or not, assuming you are already maxing your other retirement accounts.

[cooliemae]

Don't forget that you can claim mileage for the doctors appoints from the FSA and that the IRS is now allowing companies to offer a $500 rollover option on FSA's or 75 day grace period in which to spend the money.