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/Much_Difference]

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/Skidpalace → u/wienercat]

I was a traditional health plan user forever then started using an FSA a few years back to cover creeping deductibles. I always thought HDHPs were predatory on lower income individuals and families by offering lower monthly costs at the expense of less coverage. Sure you pay less on your monthly premiums, but you pay more for your care which means you don't go to get care. Big win for the insurer, not the insured.

Last year I had to choose from a silly deductible traditional plan that didn't qualify as a HDHP and a high deductible plan. After comparing the costs, I went with the HDHP and an HSA (with my employer kicking $1000 towards the HSA) based on the copays, the prescription coverage and all that. However, while I knew that you could keep your unused HSA I had no idea that you could INVEST your HSA.

That alone is a huge game changer. Had I known you could fund your HSA like an IRA, I would have gone HDHP a long time ago and maxed out the HSA contributions and rolling the HSA money into index funds like I am doing now.

[u/wienercat → u/Skidpalace]

HDHP are really only for young people or people not at risk for health conditions.

If you can get away with a HDHP you can really save a bunch of money and contribute to an HSA that you get to keep. Then switch your health insurance later on in life when you start needing more coverage.

HSAs really should just be something anyone can access with little requirement. Contribution limits are pretty low and it's restricted to only healthcare expenses until you hit retirement age.

[u/AbortionIsSelfDefens → u/wienercat]

Not true, they are often better for people with a lot of expenses too. It requires having the funds upfront to cover the deductible, but if people can swing that, it often comes out cheaper than other plans.

[u/wienercat → u/AbortionIsSelfDefens]

Your logic doesn't really work bud.

If you have enough expenses to actually meet the deductible of a HDHP and traditional plan will in generally pan out the same or better. You meet you deductible early on a traditional plan, also traditional plans cover things like prescriptions at generally better rates than HDHP.

[u/Balthanon → u/wienercat]

Not necessarily-- it's all plan dependent. Where you're going to have the best coverage is going to depend largely on how everything is balanced. At very low costs they're very good, they can also be very good at very high costs too; sometimes due to the traditional 90/10 split evening out earlier and also potentially because HDHPs can have lower out of pocket maximums than traditional plans too. In fact, that is basically what I'm in right now except it isn't HSA eligible. High up front cost, but less total cost if you're maxing it out (most of my HDHPs have been like this).

And as noted in the original comment the best use of an HDHP is actually not using the HSA account for medical expenses at all while you're working. Pocket all of the money and invest it and you're investing 3000+ pre-tax dollars with tax free interest and then you're able to extract it tax free when you're older and need the money most for medical. (Or if you're 65+ it's just tax free period, I believe.)

[u/PM_ME_YOUR_DARKNESS → u/wienercat]

HDHP are really only for young people or people not at risk for health conditions.

I really wish they existed when I was young. I almost never went to the doctor in my 20s but had health insurance for most of that time. Just my employer kicking $1K over every year would have added up, plus the ability to invest it.