I am all for saving tax money but in my opinion, FSAs (Flexible Spending Accounts) suck. I have no idea why HSAs (Health Spending Accounts) are not used more because they can carry over forever. In fact, you can make some serious money on this for future medical issues or retirement. With FSAs there are bounty hunters who deny as much as they can to save money for themselves. This happened to me and my former medical partner in a past job. Even dental work was being denied. They did it to just see who would keep trying to fight it. I just knew there was a scheme to keep the money.
Internal Revenue Service rules allowed workers to put up to $2,650 in the employer-sponsored plans in 2018. WageWorks , which manages FSAs and other benefits for 6.9 million workers, said its average participant put $1,204 into their account last year and forfeited $172 of it to their employer when they didn’t use the money in time.
It’s a joke. If my calculation is right then that means WageWorks and the companies they work with kept $1,186,000,000! Supposedly, “employers must reinvest the money into administering the plans or spend it on benefits.” But what about WageWorks and other bounty hunters?
This WSJ article talks about another sad way FSAs were used for Christmas presents. People just bought crap to use it up. What a waste! Is this the system we want?Tweet