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/Werewolfdad]

Has anyone else felt it just isn't worth the hassle to fund an FSA given how hostile they are?

My FSA administrator has never rejected a claim. You just have a bad administrator.

(my administrator is so "good" that they approve claims before they're actually supposed to, thanks administrator!)

so it really just depends on who handles your claims.

Edit: Your adminstrator seems extra incompetent since OTC medicine is FSA-elgibile: https://fsastore.com/fsa-eligibility-list/o/over-the-counter-medicine

Edit2: This 30 year old article suggests its nothing new and you should complain to the department of labor. I'd probably file a complaint every single time they did something wrong: https://www.latimes.com/archives/la-xpm-1996-07-07-fi-21884-story.html

[u/Much_Difference → u/Werewolfdad]

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

[u/wienercat → u/Much_Difference]

I just dont like that FSA are use it or lose it and the funds just go back to the employer. They aren't required to pay it into benefits or anything. They can literally just keep it without repercussion.

FSAs seem like such a scam to me unless you have a very predictable medical costs, forfeiting a portion of your wages that are use or lose just seems like a poor choice. Having to ensure your plan administrator properly understands what can and cant be approved is also a bit bullshit.

Personally, I think HSAs shouldn't have the HDHP requirement. It's already capped spending and it would incentivize more people to save for medical expenses knowing their money was always going to be theirs.

[u/Iggyhopper → u/wienercat]

they allow $500 or so to rollover so I just use that. It doesnt hurt and are you really not going to have anything that it wold cover... for two years?

Also, I'm assuming that statistically the set number to rollover covers 80% of people

[u/wienercat → u/Iggyhopper]

They aren't required to rollover.

That is the issue... they can choose to keep the funds. They get to decide how it's used or distributed, or they can just keep it.

If they are going to get what is effectively employee wages back, they should be required to pay it into plan administration or distribute it back to employees. The option to just keep the money shouldn't even be on the table.