Flex-Elect

Its open enrollment at my office; the only time of the year where you can make changes to your medical benefits. This time last year I was consumed with contemplating switching insurance companies. It was such a hard decision to make. I can now say it was probably one of the better decisions I have made concerning my health.

Another opportunity has presented itself during this year's open enrollment: the Flex-Elect Program. Also known as the Cafeteria Plan, this is a reimbursement account of out-of-pocket medical expenses. Each pay check, my employer places a designated amount of money from my pay check, "tax free" into a special account. As I encounter out-of-pocket medical expenses, I submit reimbursement claims to get my money back. The huge benefit to this program is, obviously, the tax break. It is the easiest way to essentially use medical expenses as a write off. Otherwise to write of medical expenses on your taxes you have to spend 7.5% of your income on medical expenses. Even if you don't make a lot of money, 7.5% is a lot. And having good insurance, I have never even come close to meeting this figure.

There are two down sides to this account. First, as a reimbursement account, you still have to have the money upfront. You need to be ready for the loss of income up front. The second down side is if you don't use all the money in your account within the year, you lose it. Gone. Forever. You don't want to over estimate the amount of money you set aside each month. This should not be a problem for me. Between CF clinic, prescriptions, and my allergy shots, I know I will always have regular expenses. Eligible expenses include co-pays, prescriptions, bridge fair, parking, mileage (my CF clinic is 120 miles away around trip!), eyeglasses, dental expenses, it even includes expenses for medical conferences. So if I go to CFRI next year, I can use "tax-free" income.

I guess the other down side is having to submit the reimbursements. Its just one more thing to remember to do in a busy life. But I think it will be worth it to help ease our taxes. Yeah! Why didn't I do this sooner?