How I got a $2,750 windfall
Being absentminded really paid off at the end of the year, thanks to my flexible spending account.
If I leave a $20 bill in a winter jacket, only to rediscover it after it has been hanging in the closet for nine months, I consider that a windfall.
Now I can hear a lot of you out there already: That's not a windfall, you schmuck, that's just dumb luck.
Oh, sure. You'll say I didn't gain any additional money that wasn't officially mine to begin with anyway, but I disagree.
In reality, what I really did was rediscover a little money I had unwittingly lost the previous winter. Therefore, it's a windfall.
That's my story anyway and I'm sticking to it.
Why I love flexible spending accounts
Now let me tell you about my latest windfall.
Every year, I take advantage of the health flexible spending account offered by my employer because, frankly, I'd be crazy not to. After all, it's essentially free money. Well, at least part of it is. That's because FSA contributions -- which are used to pay for out-of-pocket medical expenses that are not covered by your health insurance plan -- are tax-free. That's right, tax-free!
By taking advantage of the tax-free money I contribute to my FSA, I am, in essence, allowing the government to subsidize a portion of my annual unreimbursed medical expenses. Post continues after video.
Needless to say, every year you can bet that I use my FSA to pay for all my medical co-payments and deductibles on everything from prescription medicine to glasses and contact lenses.
In 2010, I elected to have a little over $105 deducted from every paycheck and placed into my FSA. For those of you keeping score at home, that's $2,750 in tax-free money.
My summer FSA ritual
I always have enough medical claims to use my entire FSA allowance by midsummer. Always.
In fact, I have this ritual where in August I usually tally up the family's qualifying medical expenses and then use the FSA reimbursement check to help soften the financial blow of our annual summer vacation. Usually.
I say "usually" because, on the eve before my employer's annual benefits enrollment period expired last month, I was finalizing my 2011 electives when, to my utter amazement, I realized that I had yet to request any medical reimbursements in 2010 from my flexible spending account. Yep.
Just like that, 2,750 simoleons that I thought I had already spent in August were suddenly available -- and just in time to defray all those holiday expenses too.
As the old saying goes, I was happier than a tornado in a trailer park. Heck, even the Honeybee did her little beehive dance after I told her about our large windfall.
My only disappointment was that I badly underestimated our qualifying medical expenses for the year; we ended up having more than $3,500 in all.
True, everyone has to be careful to not overestimate their annual qualifying medical expenses because FSA money deducted from your paycheck is "use it or lose it," but you may be surprised to learn that it often doesn't take much for qualifying medical expenses to quickly add up, especially for a family of four.
For example, just take a look at a gross summary of my qualifying expenses this past year:
Even though I underestimated my expenses just a bit, I'm certainly not going to quibble. After all, getting an unexpected $2,750 is nothing to scoff at. No matter what you decide to call it.
[url="http://www.bankclosures.info"]Savings Account Online[/url]
[url=http://www.bankclosures.info]Savings Account Online[/url]
<a href="http://www.bankclosures.info" rel="dofollow">Savings Account Online</a>
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Here are seven simple tips to help newbies in the credit world borrow money and build a credit history.
- The cheapskate's guide to turning happy hour into dinner
- Prepare to pay more for gas as summer approaches
- You can't be financially secure without these 10 things
- Your tax refund is safe from Social Security -- for now
- Insurers offer new incentives to eat healthy
- For $45 per month, all the coffee you can drink
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'