Saturday, February 23, 2008

Rethinking Flexible Spending account net savings

Like many people, I elect to have my employer withold a certain dollar amount from my paycheck pre-taxes and deposit it into a flex spending account. I believe I was withholding about $140 a month. At the end of the year, we had almost $900 left over. Like many plans I can spend any surplus into early 2008. Oddly the surplus was spent on expensive undiscounted eye glasses from an optician who was completely aware I had few other options to spend it on.

In retrospect, this seems ridiculous.

Fortunately, I've reduced my flex allocation to $100 per month. Depending upon how we spend money, I expect children's medical costs to rise a bit this year, we'll probaby have a $400 overage which will be a more reasonable spend on eyeglasses.

The bottom line is saving $1600 for medical expenses and spending only $700 on expenses and using $900 to overpay for eye glasses just doesn't make sense. We're wasting more than the 40% tax savings.

Then again the eyeglasses and prescription sunglasses are very nice...


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