Deadline looms on flex accounts
The rush to spend
By Joanne Foxjfox@siouxcityjournal.com | Posted: Thursday, December 18, 2008
Margaret Fuentes, human resources director for the Diocese of Sioux City, explains what's involved in filling out a health care flex plan. (Staff photo by Jim Lee)
If you thought Black Thursday was the only time people rushed to spend money, think again.
The end of the year brings people scrambling for another way to spend perhaps hundreds of dollars -- using up the money in their flexible spending accounts.
Since the 1970s, employers have offered accounts in which employees can place a designated sum to pay for medical expenses. Later, that was expanded to pay for child care. Recently, the medical expenses were broadened to include non-prescription medications.
An employer flex plan is a tax-free, no-interest program which reimburses for the medical and child care expenses for employees. Simply, you decide how much money you would like to have stashed away with the plan, and during the year, money is withdrawn from paychecks in equal increments.
The neat part? The total money is available Jan. 1 and the deduction is pre-tax.
The challenge? You have to spend the money either before the end of a calendar year or the end of a fiscal year, because if you don't, the money is kept by your employer.
That use-it-or-lose-it clause prompted Iowa Sen. Charles Grassley in 2005 to push the deadline forward for employees to declare their deductible receipts. Since then, participants have until March 15 of the following year to clean out their accounts.
Most employees need instruction when first being introduced to the concept, said Margaret Fuentes, director of Human Resources for the Diocese of Sioux City, which has had a flex plan for diocesan employees since 2001, although it runs on a fiscal instead of a calendar year.
"We provide a worksheet to help estimate a family's annual medical costs that are not reimbursed by insurance," she said. "It's not easy to just guess at what costs could surface for the next year."
Fuentes said she often uses herself as an example.
"My husband is a diabetic so we know he will have doctor and prescription costs," she explained. "I have two sons, 11 and 8, so how many times might they go to the doctor and need medication? I give employees my best guess from my own experience and what I hear from other employees."
The things covered under a flex plan include everything from dental work to eyeglasses.
Office manager Marilyn Wheelock said the dentists at Wheelock & Bursick General Dentistry will see a spike in clients starting right after Thanksgiving.
"People will start making appointments to finish up work that needs to be done or has been diagnosed," she said. "They're also looking at items such as white strips or splints so they won't grind their teeth; some plans will even pay for electric toothbrushes, which we sell here."
Staff at Bruening Eye Specialists also see an increase in clientele right after folks are done with their turkey dinners, said Tracie Reeves, certified optician.
"It's not unusual to have someone call and say, 'I need to spend $500 or $600 in my flex plan. When can I get in for an exam?'" she said. "Most of the time that can be spent on frames, lenses, contact lenses."
Unfortunately, folks who wait until that last week of the year probably can't be accommodated with an exam, Reeves said, despite the addition of Dr. Thomas Pratt in April of this year.
"Dr. (Beth) Bruening is booked up pretty far in advance so that just won't work," she said. "It has helped to have Dr. Pratt on board, but there's still only so much one can do."
Reeves' advice?
"You have to think about spending that flex money in advance," she recommended. "Don't put it off until the last minute."
Melisa Schager, clinic administrator of Family Health Care of Siouxland-Morningside Clinic, said the month of December is busy with flu and other maladies, but not many folks using up funds in their flex plans.
"That is, until the last few days of the year, when people start calling saying they need to use up their flex dollars," she said. "They want to get in for a physical or refill on prescriptions."
For the most part, reimbursement is in a timely manner. Fuentes said the third party carrier that the diocese uses, Eagle Ridge Corporate Services, can sometimes turn a request around in a day. But even with a delay, a flexible spending plan is a win-win situation, Fuentes pointed out.
"The employee saves federal, state and FICA taxes with each pay period," she said. "An employer wins by paying lower payroll taxes."
Out of time
Here are some "substantial" purchases that would use up the monies. Remember plan policies vary, so check with your employer first.
-- Contact lenses
-- Prescription sunglasses
-- Hearing devices
-- Laser eye surgery
The end of the year brings people scrambling for another way to spend perhaps hundreds of dollars -- using up the money in their flexible spending accounts.
Since the 1970s, employers have offered accounts in which employees can place a designated sum to pay for medical expenses. Later, that was expanded to pay for child care. Recently, the medical expenses were broadened to include non-prescription medications.
An employer flex plan is a tax-free, no-interest program which reimburses for the medical and child care expenses for employees. Simply, you decide how much money you would like to have stashed away with the plan, and during the year, money is withdrawn from paychecks in equal increments.
The neat part? The total money is available Jan. 1 and the deduction is pre-tax.
The challenge? You have to spend the money either before the end of a calendar year or the end of a fiscal year, because if you don't, the money is kept by your employer.
That use-it-or-lose-it clause prompted Iowa Sen. Charles Grassley in 2005 to push the deadline forward for employees to declare their deductible receipts. Since then, participants have until March 15 of the following year to clean out their accounts.
Most employees need instruction when first being introduced to the concept, said Margaret Fuentes, director of Human Resources for the Diocese of Sioux City, which has had a flex plan for diocesan employees since 2001, although it runs on a fiscal instead of a calendar year.
"We provide a worksheet to help estimate a family's annual medical costs that are not reimbursed by insurance," she said. "It's not easy to just guess at what costs could surface for the next year."
Fuentes said she often uses herself as an example.
"My husband is a diabetic so we know he will have doctor and prescription costs," she explained. "I have two sons, 11 and 8, so how many times might they go to the doctor and need medication? I give employees my best guess from my own experience and what I hear from other employees."
The things covered under a flex plan include everything from dental work to eyeglasses.
Office manager Marilyn Wheelock said the dentists at Wheelock & Bursick General Dentistry will see a spike in clients starting right after Thanksgiving.
"People will start making appointments to finish up work that needs to be done or has been diagnosed," she said. "They're also looking at items such as white strips or splints so they won't grind their teeth; some plans will even pay for electric toothbrushes, which we sell here."
Staff at Bruening Eye Specialists also see an increase in clientele right after folks are done with their turkey dinners, said Tracie Reeves, certified optician.
"It's not unusual to have someone call and say, 'I need to spend $500 or $600 in my flex plan. When can I get in for an exam?'" she said. "Most of the time that can be spent on frames, lenses, contact lenses."
Unfortunately, folks who wait until that last week of the year probably can't be accommodated with an exam, Reeves said, despite the addition of Dr. Thomas Pratt in April of this year.
"Dr. (Beth) Bruening is booked up pretty far in advance so that just won't work," she said. "It has helped to have Dr. Pratt on board, but there's still only so much one can do."
Reeves' advice?
"You have to think about spending that flex money in advance," she recommended. "Don't put it off until the last minute."
Melisa Schager, clinic administrator of Family Health Care of Siouxland-Morningside Clinic, said the month of December is busy with flu and other maladies, but not many folks using up funds in their flex plans.
"That is, until the last few days of the year, when people start calling saying they need to use up their flex dollars," she said. "They want to get in for a physical or refill on prescriptions."
For the most part, reimbursement is in a timely manner. Fuentes said the third party carrier that the diocese uses, Eagle Ridge Corporate Services, can sometimes turn a request around in a day. But even with a delay, a flexible spending plan is a win-win situation, Fuentes pointed out.
"The employee saves federal, state and FICA taxes with each pay period," she said. "An employer wins by paying lower payroll taxes."
Out of time
Here are some "substantial" purchases that would use up the monies. Remember plan policies vary, so check with your employer first.
-- Contact lenses
-- Prescription sunglasses
-- Hearing devices
-- Laser eye surgery
