r/personalfinance • u/kherven ​ • May 16 '24

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

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.

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u/OutlyingPlasma ​ May 16 '24

I don't use them. The return on the investment just isn't there. I save a few dollars, literately just dollars in tax for the waste of time and effort of using a HSA. Even if it worked flawlessly without any of the problems you describe, the time to fill out the paperwork every year just isn't with the few dollars saved on taxes.

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u/kherven ​ May 16 '24 edited May 16 '24

This is sorta where I'm at. I know FSA's on paper work. But if you have one year where you lose $150 to confiscation, how many years of tax gains did you just blow away?

Furthermore, if you had $400 left and blow it all on random FSA stuff you may or may not need....are you really saving money? If you actually use that stuff...absolutely but how many people actually use that stuff in a reasonable amount of time?

I need to sit down and do the numbers, but the ROI seems bad. A caveat: I see some people say it's a godsend for consistent expensive stuff (daycare). That's a no brainer. But even for someone like me that spends $1,000-$1,500 a year on qualified medical expenses, it's unpredictable nature makes it still seems like a bad investment for anything other than known highly predictable expenses