My wife and I went to see the doctor a few weeks ago. It’s been years since either of us had seen a primary care physician. We just didn’t have insurance. While in school she bought their subsidized health insurance, but only saw a doctor for emergencies. I never bothered enrolling in a plan offered at work. I figured, I’m young, how bad could my health be? If we treated finances like we treated our health, we’d be bankrupted! As part of the exam, they ran a whole battery of blood work. Lo and behold, I’m the pinnacle of health! Cholesterol, triglycerides, liver, kidney, etc. All normal! Actually, the doctor told me that I was a couple of pounds over weight, nothing major. The next medical visits will be to the dentist. Although my wife is a freak when it comes to dental hygiene, neither of us has seen a dentist in over five years.

I haven’t been looking forward to these health checks because we’d have to shell out money for the copays and any prescription medicines we might need. My wife has terrible allergies and mine occasionally flare up. Those Allegra D pills are expensive! To save money, we decided to contribute money into a flex spending account this year.

A flexible spending account is one of the benefits of an employer sponsored health plan. It’s a separate plan that allows you to direct a part of your pay, tax free, into a special account that you can use throughout the year to reimburse yourself for eligible out of pocket health care, dependent car, and transportation expenses. The keyword here is tax free. Lets say you’re in the 25% tax bracket and you allocate $1000 for the year into your flex spending. You’re cutting your tax bill by $250. You’re saving on money you would have spent on medical costs or any of the other eligible deductions. I think the benefit of the account is really magnified if you have a family with children. More kids, more doctor visits, more money needed for medical expenses.

One of the drawbacks to flex spending is that if you don’t use up your predetermined amount by the end of the year, you forfeit whatever’s left. But if you can estimate your expenses for the year, it’s a wise to allocate at least some money in to the account. We decided (guessed) that $750 was a good amount for this year. If we happen to underestimate, wecould always buy some new glasses or load up on medicine.