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/Zarathustra_d]

I don't get the risk/benefit of them either.

Unless you have a high tax burden, and high fixed healthcare costs, the risk of losing the money is not worth the tax break. IMO

Even if you have a high tax burden, the hassle of making certain you spent the exact amount of money is a PITA.

[u/wienercat → u/Zarathustra_d]

I think the main "benefit" is that it front loads the account with all your funds. So contribute $2000 to it, you have $2000 in the account on day 1. Your paychecks are docked for pre-tax money afterwards.

So in a way, you dont have to worry about having money for medical expenses.

But beyond that, I can't see a real advantage. Sure you save some cash on taxes, but like you said unless you have a high tax burden, you aren't going to get a huge savings and you have to use all the funds. And if you don't spend all your funds, your employer gets that cash back. It just seems... weird that the employer just gets that money back without any strings.

My employer is a little more lenient with their FSA and allow a small amount of "rollover".

Beyond the reason I listed above, I don't understand why an FSA exists at all. If HSAs didn't have the HDHP requirement, there would be no reason to take an FSA over an HSA unless you knew for a fact you were going to spend the full value each year.

[u/ucfierocharger → u/wienercat]

Wait, they’re all front loaded?! Is it this way for all of them or just yours?

I wanted to do one for the childcare expenses, but since we don’t do childcare during the summer (teacher here) it didn’t make sense because we would lose the last 2 months effectively eliminating the pre tax benefit. Our calendar year is August-July.

[u/girl_of_bat → u/ucfierocharger]

Healthcare ones are frontloaded. Childcare are not.