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6 Ways to Make the Most of Your Open Enrollment

By Manisha Thakor

September 20, 2011

It's that time of year again, open enrollment period.  This is the annual window where you can sign up for, or adjust, your participation in a variety of employee benefits that range from traditional health insurance to one of my favorites—flexible spending accounts ("FSAs"). 

Alas, a recent Harris Interactive/Aflac study showed that 77 percent of people admitted that they made mistakes when signing up for their benefits packages in past years, with 42 percent saying those mistakes cost them money.

What kind of mistakes are we talking about?

One of the most common errors actually was forgetting to sign up for FSAs.

Given today's economic environment, you no doubt want to save as much money as you can. That makes FSAs, in particular, a benefit that you really want to take the time to understand. Why? FSAs enable you to set aside pre-tax dollars to pay for qualified health care costs. Depending upon your tax-bracket, an FSA can save you up to 40% on items you already pay for out-of-pocket (such as co-pays for doctor visits or prescription drugs).

Health care FSAs aren’t the only pre-tax benefit that you can sign up for.  There are others, including benefits that cover dependent care and commuter expenses. If you work for an employer who offers one or more of these valuable benefits, make sure you don’t miss out on your opportunity to enroll and save.  Even if you’ve participated in the past, you still have to re-enroll in these benefits each year. 

Whether it's thinking about traditional insurance or pre-tax benefits, the most common sentiments I hear from folks about their employee benefits are that they feel overwhelmed and confused. So here is a list of 6 resources that you can use during this year's open enrollment season to make the most of the benefits available to you through your workplace.

  • WageWorks – Confused about the pre-tax benefits offered by your employer? Benefits provider WageWorks (a company that I have proudly teamed up with on a consumer awareness campaign) has calculators for every type of pre-tax benefit that your employer might offer (e.g., healthcare FSAs, dependent care FSAs, commuter benefits, and Health Savings Accounts) that will help you to estimate your eligible expenses and expected tax-savings.
  • Consumer Reports Health Website – Confused about health insurance? This website offers a wide range of information on this topic, including a comparison of different insurance offerings by state, as well as in-depth articles on how to choose a plan and what changes you should expect in the era of health reform.
  • Plan for Your Health – Want more help with health insurance? Aetna and the Financial Planning Association have teamed up on this site to offer some excellent tools to reference while you make your open enrollment choices, including a glossary of benefits terms (aka, dummy guide) and calculators for health and baby-related expenses.
  • Simplee.com – Feel like your medical costs are spiraling out of control? If you’re willing to provide Simplee with access to your medical records, it can help you make sense of your medical bills and figure out where you can save more money.
  • Metlife’s Employee Benefits Simplifier Tool - Overwhelmed by the range of other benefits offered by your employer? This site asks you to answer a few questions about your family and income, and then provides you with an overview of which benefits you will likely want to sign up for during open enrollment. Using the tool only takes about 5 minutes and it will help you consider everything from disability insurance to 401(k) contributions and more.

Of course, the best resource during open enrollment is always your Human Resources department.  They will have all the information that is specific to your particular benefit offerings. So don't hesitate to ask them any questions.

Lastly, remember to keep all of the relevant information you receive (brochures, emails, etc.) in a special location so that you can easily refer to it when making selections for you and your family during this year's open enrollment season.

Do you have any favorite resources that help you plan for your open enrollment choices each year?  If so, please tweet them to me at @ManishaThakor with the hashtag #enrollmenttools.

Common-Sense Reforms Could Improve FSAs

By Manisha Thakor

August 31, 2011

There’s no doubt that resolving our debt crisis is important, but what is top of mind for many is to find ways to deal with our own household economic needs.  Beyond broader economic solutions, the federal government should seek to implement policies that provide immediate relief to consumers struggling with such challenges as stagnant wages and the increased cost of health care. 

Specifically, the federal government has an opportunity to improve the access and viability of pre-tax flexible spending accounts – accounts exclusively designed to save consumers money.

Over the past year, I've had the honor to team up with WageWorks on a nationwide campaign designed to educate consumers about the value and appropriate use of pre-tax accounts, which can help consumers save up to 40% on eligible out-of-pockets costs for health care, dependent care and commuting.  However, the health care accounts could be greatly improved for consumers if the government adopted a few common-sense rule changes.

End the “Use It or Lose It” Rule

As I speak to employees around the country who are eligible for this generous benefit, time and again the number one reason I hear why people don’t sign up is because of the "use it or lose it" rule, which requires participants to give up any unused funds in their accounts at the end of the plan year.  Although the average FSA participant actually saves quite a bit more than they forfeit, there is a simple way to eliminate this fear and increase participation – end the rule.

It’s time for Congress and the Administration to simply allow consumers to cash out and pay taxes on their remaining FSA balance at the end of the plan year or to roll over any unused amounts to a future year.  As a result of this change, consumers would get much-needed help with covering the cost of increasing out-of-pocket health care expenses, dollars earmarked by consumers for health care costs wouldn’t be wasted on unnecessary services or products in a “rush to spend” unused funds and, in the case where unused funds are cashed out, the government would receive additional tax revenue.

End the “OTC Prescription” Rule 

Many consumers manage their own health care with over-the-counter (OTC) medications.  Unfortunately, the Affordable Care Act included a new rule that prohibits OTC items from being paid for with FSA, HSA, and HRA dollars unless a prescription is first obtained from a doctor for those items. 

And we're not talking high-powered drugs.  The OTC list includes things like allergy medication and everyday pain relievers.  Making an extra appointment to get prescriptions for these common OTC items is a burden on the healthcare system and patients alike, and drives up health care costs.  Clearly, the OTC prescription rule needs to be scrapped to provide consumers with practical access to health care treatment and health care funds.

Tell Congress to Improve the Access and Use of FSAs

Thankfully, these simple fixes to FSAs have already been recognized and included in legislation introduced by Congress earlier this year.  I know common-sense compromises have always been at the heart of American policy, and I sincerely hope that our government takes action to remove these restrictions this year.

If you agree with me that these fixes should be made, I strongly encourage you to understand the issues and get involved.  To find out who your representative is and learn more, visit www.SaveMyFlexPlan.org.

Uncle Sam Wants To Help You... With Summer Camp Costs

By Manisha Thakor

July 27, 2011

Ask a working parent how they feel about summer and you may be surprised.  Thoughts of beaches, barbeques, and balmy days at the ballpark are often overshadowed by something much less exotic - concerns about childcare.

If you have children under the age of 13, and you need childcare so that you can work, look for work, or attend school full-time, you are in luck.  Dependent care flexible spending accounts ("FSAs") can save you up to 40% on a wide range of childcare-related costs.

I'm continually amazed at how many people have access to this valuable benefit at work, but don't utilize it. The three most common reasons I hear for people not taking advantage of this employee benefit are: (1) a belief that dependent care FSAs only cover a few scenarios, (2) a perception that the cost savings aren't that great, (3) a feeling that there is too much paperwork involved to make participation in a dependent care FSA worthwhile. 

That's why I've teamed up with WageWorks on a nationwide campaign to help hard working employees better understand this valuable workplace benefit. So let's take a look at each of these three common concerns.

  1. What exactly is covered by a dependent care FSA?  You can use these funds for before- or after-school care or special programs, a babysitter or nanny, and even the cost of day camps during the summer or other school holidays for any children under the age of 13. For a full list of eligible dependent care expenses, click here. And since it's the rare family who isn't feeling a tightening of the wallet, it's worth noting that there are summer camp options in almost all budget ranges. According to the American Camp Association  fees for a full week of day camp can start at as little as $75 while the upper end can be in the $800 plus range (note: overnight camp fees are not FSA eligible expenses).  On top of this, over 90% of camps offer some form of financial assistance ("camperships") while others offer discounts for things like multiple enrollments from one family.  Combining all available discounts with a dependent care account can make summer childcare much more affordable.

  2. How much money you can save by using a dependent care FSA? Let's start with a quick review of how these accounts work. As with pre-tax accounts for healthcare and commuter costs, a dependent care FSA allows parents to select a specific amount of money during their firm's open enrollment period to have deducted from their paycheck throughout the year before taxes. This lowers both your taxable income and the amount of income taxes you owe. And the money you withdraw from your FSA for eligible expenses is not taxed either. Or said slightly differently, using an FSA to pay for qualified expenses is like being handed a coupon for up to 40% on a purchase you were going to make anyway. (Click here for a nifty calculator you can use to assess the cost savings of your particular situation).

  3. Are FSAs too much work?  FSA participation is a simple three-step process.  First, review the list of eligible expenses and estimate how much you will be spending in the coming year. Second, during open enrollment season (typically during the fall) you decide how much you want to contribute to your dependent care (and/or healthcare and commuter) FSA.  In the case of dependent care FSAs, the maximum amount that can be contributed at present is $5,000. Note, healthcare and commuter FSAs are subject to different contribution limits, you can read more about all types of FSAs at SaveSmartSpendHealthy.com and FSAFeds.com). Also note that if you have what is called a "qualifying life event" such as getting married, divorced, widowed, birth or adoption of a child, or if you experience a significant rate hike in the cost of your childcare... you can adjust what's called your "FSA election" or how much you are choosing to contribute. Third, you pay those dependent are expenses and then simply submit a claim with supporting receipts - and you will get those funds reimbursed back to you (and many firms allow you to receive those funds via direct deposit).

If you've already signed up for a dependent care FSA, this is a great time of year to ensure you are making the most of those FSA dollars. And if you haven't enrolled yet, let this article inspire you to talk to your Human Resources department ahead of this fall's open enrollment period so you are in the best shape possible to maximize the fun and sun of summer.

Are High Gas Prices Leaving You "Gas"-ping for Relief? Commuter Accounts Can Help!

By Manisha Thakor

June 13, 2011

Recently a friend emailed me a photo from a gas station. It showed a $100 price tag for filling up the tank on his 2004, fully-paid-for SUV. The message said: “Holy Cow – I’ve never seen a bill like this before.”

Welcome to the new normal in transportation. Millions of consumers who are already reeling from job losses, stagnant wages, and declining home prices now have a new life challenge to add to the list: the specter of $4/gallon gasoline. According to an Associated Press poll, a whopping 4 out of 10 Americans are experiencing financial hardship due to rising gas prices. With the average family spending $110 or more a month on gas than they were just six months ago, it’s no wonder many people are finding themselves “gas”-ping for relief.

So what can you do to help ease the financial pain?

Check with your employer to see if they offer a Commuter Account. This nifty employee benefit enables you to pay for commuting-related expenses, such as public transportation costs (think: bus, subway, train, ferry, bicycle and vanpool expenses), as well as parking (either near public transportation or at work)…with pre-tax dollars.

Those last three words, “with pre-tax dollars,” contain the hidden treasure. In plain English, that phrase means you could save up to 40 percent on these qualified commuter-related costs. The reason is that, when you sign up for a Commuter Account, the money used to pay for those expenses comes right out of your paycheck before Uncle Sam takes his share, so you are not taxed on those dollars.

gas stationAnother neat feature of Commuter Accounts is that they are quite flexible. You can sign-up (or sign-off) on a monthly basis throughout the year. This monthly enrollment feature is in contrast to the other types of pre-tax benefits, like health care flexible spending accounts, which limit your ability to sign-up to just once a year during open enrollment period or when you experience a qualifying life event, such as the birth of a child.

As luck would have it, around the corner on June 16th is “Dump the Pump” day. This is a nationwide celebration of the myriad of ways in which we can each rethink our transportation strategies. So if you are driving yourself to work each day and getting sick of the prices at the pump, this is a great time to think about switching to public transportation, as well as taking advantage of Commuter Accounts to pay for your qualified commuting expenses.

Shockingly, only 1 in 5 workers eligible for Commuter Accounts takes advantage of this money-saving benefit. That’s why I’ve teamed up with WageWorks to help raise awareness around this cost savings opportunity. And given that signing up for this benefit is like getting a coupon for up to 40 percent off qualified expenses, you’ll want to run—not walk—to your benefits office to see if you are eligible.

Last but not least—let’s talk bottom line. How much could you realistically expect to save by taking advantage of these types of programs? Well, each month participants can contribute up to $230 for public transportation and $230 for parking costs – if the parking lot is near the workplace or used to get to the workplace. (To get a sense of the cost savings for your specific situation, check out this nifty online calculator). Assuming full use of these benefits is made by a participant who is in the maximum tax bracket, annual savings can be in the $1,800 to $2,200 range. Now that’s something worth gas-ping about…but this time for joy.

5 Ways To Use Your FSA... Before Year End 2010

By Manisha Thakor

December 2, 2010

The end of the year is almost here - and that means it's a great time to put any remaining balance in your flexible spending account ("FSA") to work. These funds have to be used up by the end of the year (or by the end of your workplace’s grace period) or they are forfeited.  So as we head into the holiday season, give yourself the gift of saving up to 40% off qualified healthcare expenses by using your FSA.  Below are 5 easy ways to do just that:

  1. Get a flu shot and update your routine vaccinations.  Has everyone in your household gotten their annual flu shot?  Is everyone up-to-date on vaccinations?  If not, now is the time to get them to make sure your body is in its top shape and able to fight illnesses that seem to spread quickly during the winter months.  My husband and I were able to get our flu shots at our local drug store with minimal wait. 
  3. Purchase necessary healthcare supplies and medicines. While you are getting that flu shot you can also use your 2010 FSA funds at the drug store to buy a variety of OTC items such as band-aids, allergy and sinus medications, pain relievers and contact lens solution. By buying items in advance, you’ll have what you need on hand in case things get busy in the New Year. While you're at it, do you need new glasses?  If so, don't forget that you can use your FSA funds for those as well!
  5. Go see the doctor for routine check ups.  If you have not already visited your general practitioner, dentist, and eye doctor for your routine exams, schedule those appointments before the end of 2010.  In addition, if you see specialists such an acupuncturist or chiropractor, take a look at your FSA balance and see if you want to schedule any additional visits before year-end.
  7. Invest in your health and wellness.  When it comes to taking good care of your physical self, an ounce of prevention can go a long way.  So if you've vowed to stop smoking or lose weight, your FSA can help.  Smoking cessation programs are FSA eligible as is weight loss counseling, provided you have a note from your doctor deeming it a medical necessity.
  9. Track your medical mileage.  Did you know that gas and transportation fees to and from eligible medical appointments are also FSA eligible? You can get back up to 16.5 cents per mile*, so be sure to log your miles as you travel between your home and the doctor’s office.

Last but not least, spend a few minutes familiarizing yourself with the wide array of items that are FSA eligible.  A recent study showed that 80% of household decision makers had trouble identifying exactly what items they could spend FSA dollars on.  Thankfully, you don't have to be part of this statistic.  On the SaveSmartSpendHealthy.com website there is an easy-to-browse list of eligible expenses

When I first saw the entire list, I was surprised at how many of the healthcare items I have to buy anyway are FSA eligible.  Taking the time to make sure you use up your remaining 2010 FSA fund is a great way to make sure you are in tip-top shape to enter the New Year!

*16.5 cents per mile is the rate for 2010. The 2011 reimbursement rate is 19 cents per mile.

Four Ways Healthcare Reform Will Affect Your FSA

By Manisha Thakor

November 10, 2010

These days it feels like change is the only constant.  As working Americans prepare for open enrollment – the annual window where you can make key elections to your employee benefits – it's very important to be aware of a number of recent changes that have occurred as a result of health care reform, including those changes that impact flexible spending accounts (FSAs).

For those not already in the know, FSAs are a great way to plump up YOUR bottom line by enabling you to pay for necessary out-of-pocket medical expenses with pre-tax dollars. As a result, when you sign up for an FSA, you can save up to 40 percent on expenditures that you are going to make anyway. 

To help current and prospective FSA users prepare for open enrollment, here are four key differences from last year that you should know about when planning how much to contribute to your FSA account:

  1. OTC Medicines Are Still Covered... But You Will Need A Prescription. When there is change, there is often confusion.  A number of news stories have inaccurately reported that the IRS is no longer allowing over-the-counter (OTC) medications to be paid for with FSA funds.  Thankfully, this is incorrect.  The truth is that starting January 1, 2011 OTC medications (excluding insulin) will require a doctor's prescription in order to be paid for with FSA funds.  Note: the key word here is "medicines." Other non-medicinal OTC items such as band-aids, crutches and diagnostic kits can still be paid for with FSA dollars prescription-free.  The easiest way to prepare for the new rule around OTC medications is simply to have a frank dialogue with your doctor at your next annual exam and get the necessary paperwork (specifically, a prescription) in advance for things like allergy medicine or pain relief capsules.

  2. Contribution Caps Are Coming... So Plan Today For Elective Procedures.  Starting in 2013, annual contributions to FSA accounts will be capped at $2,500. (Right now contribution caps are set by individual employers, and tend to average around $5,000).  If you've been contemplating an elective procedure for you or a qualified family member - such as LASIK or braces - 2011 and 2012 are the last two years in which to set aside and use extra funds in your FSA. Remember, a payment made with FSA dollars is akin to getting a discount of up to 40 percent off since you are paying with pre-tax dollars. So it's really worth it to make an estimate of your FSA eligible expenses for the coming year and sign up to contribute that amount into your account.

  3. Adult Children Get A Helping Hand... Under Certain Circumstances.  Thanks to healthcare reform your adult children can stay on your healthcare policy up to age 26 - as long as they are not offered coverage by their employer.  Now is a great time to check in with your entire family and see who might need coverage and/or whether any of your adult children qualify as dependents.  Note: some firms will allow mid-year FSA contributions to reflect the addition of adult children so check with your HR department about their policies on qualifying events.
  5. "Free" Preventative Care... Means Some Costs Will Go Away.  Last but not least, routine screening for blood pressure, diabetes and cholesterol may no longer require a co-pay. Other cancer screenings like mammograms and colonoscopies as well a pre-natal care visits, vaccinations, and routine infant and childcare checkups may also be provided as part of your baseline insurance - thus requiring no additional out-of-pocket cost.  If you had previously used your FSA to pay for these expenses, you can pare back here.

Ultimately, spending a little bit of time understanding how healthcare reform may change the amount you choose to contribute to your FSA for 2011 is an investment that you won't regret.


Use an FSA to Make the Most of Your Money During Open Enrollment

By Manisha Thakor

October 8, 2010

As we head into the fall, millions of employees across America have an opportunity to save money on their healthcare.  This is because fall is "open enrollment season" when workers have the opportunity to select from a menu of employee benefits that can leave them with more take home pay - if they sign up for them.

Unfortunately, many hard-working Americans don't understand a very important benefit - the flexible spending account, or FSA – and how it can be used to save them money.  This is further illustrated by the low enrollment rate – only one out of five Americans with access to this valuable employee benefit signs up.

Why the low enrollment?  A recent national survey by Schireson Associates for Save Smart, Spend Healthy and WageWorks, a leading benefits provider, holds some of the answers.  It found respondents were confused about the advantages of FSAs, with a whopping 86% of respondents having at least one misconception about how the benefit works.  Here are some other interesting results:

  • 78% could not identify the types of expenses that qualify for reimbursement with an FSA
  • 54% said of all their workplace benefits, an FSA was the one they knew the least about
  • 21% did not know that FSA contributions are exempt from income and social security taxes – a prime reason for signing up
  • 14% didn't know if their employer even offered an FSA

If you are new to FSAs, they are a wonderful way for hard-working Americans to pay for routine out-of-pocket qualified healthcare expenses - such as co-pays for doctor visits, prescription drugs, eye glasses, and braces - with pretax dollars.  Basically, this allows you to pay for your health expenses with money set aside before Uncle Sam can tax it.  And, more importantly, it means that you are likely to save up to 40% on your reimbursable health care expenditures. 

Here’s the good news for those looking to sign up: open enrollment, the time of year when you select your suite of workplace benefits, should be here or right around the corner.  And what you need to do during open enrollment period is decide how much of your paycheck you'd like to have deposited into an FSA account – taken out over the course of a year – so that you can take advantage of tax-free spending on over 100,000 eligible items.

Currently, 33 million Americans are using FSA accounts, and they are happy about that decision.  Nearly 90% of survey respondents who are enrolled in an FSA plan to do so again next year.   And while there is a requirement that you must use all the money in your FSA account by the end of the plan year or risk having it forfeited, 94 percent of survey participants felt their FSA contribution was "just right" or even "too low."  A mere 6 percent thought they had set aside an amount that was "too high."

So this open enrollment season, be sure to check in with your HR or benefits department to see if your workplace offers an FSA (more than 80% of employers with 500 or more employees do) and decide how much you want to set aside. 

We all have some out-of-pocket healthcare costs - so if you are unsure about what to set aside in an FSA, start small.  Even contributing a few hundred dollars can save you cash that will come in handy for dinners out and special occasions throughout the year.


3 Ways to Make Sure Your Employee Benefits Really Benefit You

By Manisha Thakor

September 27, 2010

It's that time of the year again - open enrollment.  This is your chance to make critical decisions that will impact you and your family during the next year.  Here are three powerful tips to make sure your employee benefits really benefit you.

1. Don’t pass up on money-saving programs. Many employers offer an array of benefits that at first blush can seem like alphabet soup.  You may have access to a Health Savings Account (HSA), Health Reimbursement Arrangement (HRA) or Flexible Spending Account (FSA).  If those letters aren't whetting your appetite, maybe this will: all three of these benefits allow you to save up to 40 percent on qualified medical expenses.  And there are other money-saving benefits your employer may offer, such as transit and dependent care accounts - which enable you to save big by paying for a wide array of qualified expenses with pre-tax dollars.

2. Run the numbers & plan ahead.  It's the rare person who doesn't have some type of out-of-pocket medical expense not covered by health insurance.  Whether it's co-pays or routine prescriptions, those bills can really add up. So take a few minutes to use this calculator to estimate your 2011 health care expenses and determine how much to set aside in an FSA.  Additionally, be aware that a new health reform rule set to go into effect in 2013 will cap all annual FSA contributions at $2,500.  With this limit looming, I’d suggest planning to use your FSA to cover any elective and expensive procedures you may be considering - such as LASIK eye surgery or braces for a child or yourself - before that cap kicks in. 

3. Know your options. Just as you might ask a waiter if there are any new items on the menu, don't forget to ask your employer if there have been any changes to the coverage options since the previous year.  And while you are at it, don’t be shy to get clarification on rules and limits set for each benefit.  Since an FSA is offered by your employer, your HR director or benefits manager will be able to give you the low down on the plan’s unique features such as the contribution limit and process for getting reimbursed.  In some cases, employers offer use of a debit card to make health care purchases and streamline the reimbursement process. Lastly, ask whether your employer contributes to the account (some employers do).

By following these simple tips, you position you and your family to get the maximum out of the buffet of employee benefits offered at your work place. 


Why You Should Save Smart & Spend Healthy with an FSA

By Manisha Thakor

August 9, 2010

Hello there! Are you looking for ways to maximize your money? If so, you've come to the right place. As a personal finance author with more than 15 years of experience in the financial services industry, I’ve learned that managing your money does not have to be complex. In fact, by following a few simple, common sense financial steps, many hard-working Americans can sit firmly in the financial driver's seat of their lives.

If you are reading this message the odds are high that either you or your spouse has access to one of personal finance's best kept secrets — the flexible spending account (aka "FSAs"). I've teamed up with WageWorks’ Save Smart, Spend Healthy campaign to help raise awareness about this fabulous employee benefit for highly personal reasons.

Over the years, I’ve been blessed to work for employers that have provided excellent benefits, like FSAs. As someone who suffers from three chronic conditions not always covered by health plans (depression, psoriasis, and adult acne — ugggh), I routinely had sizable out-of-pocket costs for medications and co-pays for specialist doctor visits. As I worked to manage my depression and clear up my psoriasis and adult acne, it became crystal clear to me what a financial gift an FSA is.

The bottom-line is that FSAs are exclusively designed to help hard-working Americans keep more of their hard-earned money, better manage their health care and save on the routine out-of-pocket health expenses we all face.

As you’ll learn by exploring the Save Smart, Spend Healthy website, participating in your employer's FSA is a lot like standing in the checkout lane at the grocery store and having the person behind hand you a coupon worth up to 40% on your purchase. You'd be crazy not to accept. That's why I'm here. To help you make the best choice for you and your family when it comes to your employer's FSA benefit.