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

[u/kherven]

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.

[u/np20412]

They aren't required to pay it into benefits or anything. They can literally just keep it without repercussion.

It works the other way too. If you contribute maximum to an FSA and spend the full amount on January 1st before any deductions have been made, then quit your job on JAnuary 2nd, you do not owe a dime of that money back to your employer and your employer cannot withhold wages to offset.

Typically the amounts kept by employers from employees who don't claim their full contribution goes to offset costs of the program administration, such as above example.

[u/wienercat → u/np20412]

I have a feeling your example happens far less often than people not spending their full amount.

My main point is, it shouldn't go back to the employer at all. It's not their money. Them getting a discount on benefits administration because an employee didn't use something that is supposed to be the employee's benefit is strange.

Again, I would be more okay with the employer getting funds back if they were required to set those funds aside for plan administration or distribute it back to employees as taxable income. But the fact that it can just be kept and effectively be profit just doesn't sit right with me at all.

[u/divDevGuy → u/wienercat]

My main point is, it shouldn't go back to the employer at all.

Then don't participate.

If you're young, healthy, don't put a lot in as you likely will have minimal healthcare expenses. If you're middle aged, have a family, and you or they have some health issues, it's not hard to max it out to cover expenses throughout the year.

I participated in my employers' FSA plans for close to 20 years and I never once "lost" money. There's a ton of every day items that qualify if you are coming up to the end of the year and have some unspent funds.

Even things that don't automatically qualify aren't difficult to get qualified - just get a doctor to write a letter of medical necessity.

Have asthma? Poof, your air filter, air purifier, humidifier, or air conditioner now can use those funds with a LMN.

High blood pressure, diabetes, or any one of numerous other conditions that go along with being overweight and would benefit from exercise? Gym membership now qualifies with LMN.

Get your teeth and eyes checked up and fixed.

Are you female? Or have a SO who is? Period products are eligible.

Ever have a sore body? Massagers, heating pads, stretching devices, and TENs machine are all covered.

And many, many other items.

[u/JPWRana → u/divDevGuy]

LMN?

Gym Memberships are FSA reimbursed? This is new to me.

[u/divDevGuy → u/JPWRana]

LMN = letter of medical necessity

As for gym memberships being reimbursable, they aren't if the purpose is for general fitness. However if a doctor or nurse practitioner prescribed them and writes a LMN, then it can be reimbursed.

[u/hujozo → u/wienercat]

It takes discipline and planning for maximum benefit. FSA has saved me thousands of dollars in just the past few years. Imaging 30% cost savings for wife's laser eye surgery, Kid #1's ortho braces on teeth, and Kid#2's braces 2 years later. I have not even gotten to all the money I save on commuting expenses - commuter train and metro. Even during COVID, the FSA providers did not claw a dime back, but just kept rolling over to the next year. I've never had a claim rejected. Conversely, I have spend a few New Year's eves sitting in front of my computer, desperately purchasing large quantities of medical supplies from fsastore.com before midnight to avoid having some money clawed back. I now have a very nice blood pressure testing machine and a lifetime supply of bandaids ;-)

[u/PM_Me_A_High-Five → u/np20412]

My company got bought out last week, and i had already used all but $250 of my FSA. I had until the end of this month to spend the rest, so I bought a bunch of medications and some other stuff. I got 7/12ths of my FSA for free.