Flexible spending account question

[javasaurus]

My Google-fu is more like Google-fubar this morning. Sigh.

Is it possible to get a flexible spending account (FSA) for health care, other than through your employment? I've Googled this every which way I can, and yet, I keep finding information for employees. Specifically, can this be done if you are retired?

If you don't know what an FSA is, here is a

Brief description of an FSA

At work, I'm able to have money withheld each pay period for a "flexible spending account" and then I can draw on this account to cover medical bills (including co-pays, over-the-counter drugs, glasses, etc.) that insurance doesn't cover. I decide how much to put in each year, and if I don't use it all by the end of the year, I lose the excess. So why do it? Tax benefits -- the dollars that you put into the account are pre-tax, and do not get taxed when used. So your co-pays and over-the-counter meds are paid with non-taxed money. If you spend a thousand dollars a year on medical expenses, using such a plan might save you $200 to $300 per year, depending on your income tax rate.

Comments

[acroyear70.livejournal.com]

http://en.wikipedia.org/wiki/Flexible_spending_account - short answer, no. It's an employee benefits program administered by the company. It's similar to how a 401K is an employee benefit program, where-as an IRA is a separate personal matter.

Retirees have it different: your tax rate on medical expenses is calculated as a percentage of your total income. If you actually have medical expenses that would warrant an FSA for anyone younger, it is highly that the expenses already are more than 7% of your income (retirement fund + social security, plus interest in the bank on cash that might have been from, say, sold property or other inheritances like spouse life insurance). That being the case, your medical expenses are already tax-deductible, so the FSA is pointless.

Of course, there's always that lower middle-class buffer range from hell, where your income doesn't qualify you for some benefits, while your expenses make it impossible to pay for some things - like parents paying for college: their income puts the student out of range for most gov benefits, but they have costs in the family that make it so they can't pay for the education either.

In those cases, talk to a financial planner, 'cause that's there job: to know how to get around these things so you don't starve.

[bellev.livejournal.com]

What about persons who are self-employed, they have no recourse for setting aside pre-tax dollars?

[javasaurus.livejournal.com]

see my comment below about HSAs

[javasaurus.livejournal.com]

OK, I've learned a little bit. There is another similar program, called a Health Savings Account (for anyone with a qualified "high-deductible health plan"). Apparently this works similarly to an IRA, in that you add pre-tax dollars to it, and can take that money out tax free to use for medical expenses. The HSAs are aimed primarily at the self-employeed, or small businesses.

"high-deductible" for 2009 means an insurance with deductible of at least $1150 for individuals, or $2300 for families.