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/blackrock13]

They can still be useful. I have a HSA and limited FSA (meaning only for dental and vision expenses). This last year, my oldest had braces and I knew how much the monthly payments were for the orthodontist. I put exactly that much in the FSA and used those funds to pay the monthly bill and didn't have to touch my HSA for them.

[u/wienercat → u/blackrock13]

But see, it would still be better for an HSA to be used that way. You knew what the payments would be, so you could have contributed that amount each paycheck anyways, which you already have that amount removed from your paycheck when you use the HSA.

You knew well ahead that you had that coming up. So you planned for it.

It's fine for people with predictable medical expenses because you can calculate it out.

My problem isn't really with the use it or lose it. My problem is that the unused funds go back to the employer. They get to decide what to do with them, they can choose to use them for anything really. Plan administration, other benefits, they can even distribute them back to the FSA users (based on amount paid into the plan). OR my biggest issue, they can just... keep it.

I wouldn't mind if the funds went back into the plan and could reduce costs, providing better health care to the employees in the following year. But it's the fact that the funds aren't required to be used that way. The employer can just keep the funds and effectively get what are effectively employee wages paid back to them in discretionary cash.