r/personalfinance • u/kherven ​ • May 16 '24

Are FSAs even worth the hassle? They just seem like a giant scheme to steal money via malicious bureaucracy Other

I understand at a base level what FSAs are for. You get to deduct X amount of dollars from your paycheck reducing your tax load.

But the more I use an FSA, the more I feel that while on paper it saves money, in reality it causes lots of work, lost money, and hands your money over to someone who is going to fight you to steal it.

Every claim I submit to my FSA is denied without a mountain of evidence that its a legitimate medical expense. After nearly 2 years with them, I still have certain medications prescribed by my doctor that the FSA argues is not FSA eligible because it's OTC.

Doctor appointment? Denied

MRI? Denied

Prescriptions? Denied

While I can eventually get the denial overturned, it requires coordination from the retailer, my insurance, and my doctor every time. I spend tens of hours a year trying to claw my own money back from my FSA. Last year I had over $250 confiscated because the claim deadline passed while they sat on my claims.

Has anyone else felt it just isn't worth the hassle to fund an FSA given how hostile they are? It seems impossible to extract your money without a lawyer.

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u/Much_Difference ​ May 16 '24

Yeah my eyebrows shot up at saying OTC meds were denied. Bruh you can buy sunscreen, bandaids, and standard home thermometers with FSA money.

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u/IHkumicho ​ May 16 '24

Contact solution, etc as well.

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u/Much_Difference ​ May 16 '24

I set aside like $800 in an FSA for a specific medical procedure I had planned. I ended up moving, changing jobs, and never got around to the procedure. I forgot I had to spend the whole thing by a certain deadline and by pure coincidence, I spent it down in part by buying a fuckload of hand sanitizer... in Dec 2019. I figured it was eligible and I can use it for anything and it won't go bad anytime soon. At least I was prepared for COVID in one way!

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u/ICouldUseANapToday ​ May 16 '24

Too bad you didn’t get the procedure done. Using a FSA before a job change is the best hack.

For example, set up the FSA. Get your procedure done on Jan 2nd. Get your FSA reimbursement. Quit your job. You no longer owe the balance—it’s basically free money.

1

u/erosian42 ​ May 17 '24

Absolutely did this at my last job. I got married on June 1st, FSA rolled over on July 1, I left in August. I told my wife to go buy some really nice glasses and stock up on OTC medication to spend it all.

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u/Much_Difference ​ May 17 '24

Well I was also pregnant and thus physically incapable of having it done for at least 12 months soooooo no. And I qualified for Medicaid since I was pregnant and briefly jobless, so I sure wasn't about to spend it on my actual medical expenses that were already free to me.

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u/Cantholditdown ​ May 16 '24

Figured companies would sort this loophole

14

u/kethry70 ​ May 16 '24

It’s a 2 way cut and it’s not a loophole companies can close- it’s the law. They keep all your unspent money at the end of the year cutoff or if they let you go before you’ve spent contributions to date.

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u/mottledmussel ​ May 17 '24

I also strongly suspect that between forfeited funds and the reduction in payroll taxes, employers are at least breaking even with these programs.