Flex spending accounts (FSA) are tax-advantaged accounts that are set up through a plan by ones employer. Think of them as a medical savings account, if you will. These accounts allow employees to set aside a portion of their paychecks to be put medical expenses, dependent care or other related expenses. However, if the funds are not used by the end of the plan year, the funds are lost - "use it or lose it".
If you visit a doctor regularly, bills can pile up. You can use your FSA account to help pay for medical expenses instead of paying them "out-of-pocket". Or if you have a medical emergency and are faced with a rather large doctor bill post-insurance coverage your FSA can help bring down the debt that has suddenly fell into your lap. FSA's can really help you out in a bind and you can choose the amount each month you want deposited in the account. Not to mention this is tax-advantaged money.
If you are healthy and rarely visit the doctor, but are setting aside the money for an emergency - you have a right way of thinking. However, if the money you have set aside is not used before the end of the plan year, you will lose those funds. Is it worth the risk to potentially lose hundreds of dollars?
Let us know: Do you have a flex spending account? Are you for them? Against them? Share your FSA experience and thoughts with us!