One way we can support financial wellness is by making intentional use of Flexible Spending Accounts (FSAs). FSAs allow employees to set aside pre-tax dollars for eligible health care or dependent care expenses, which can reduce taxable income and help manage predictable costs such as copays, prescriptions, and childcare. The Internal Revenue Service (IRS, 2024) notes that FSAs are designed specifically to help employees manage out-of-pocket expenses more efficiently.
On a personal note, I used to struggle with making copayments and covering medical services before reaching my deductible. That challenge became even more pronounced when the employer medical reimbursement arrangement was reduced and eventually eliminated. Over time, I realized that my medical expenses were unavoidable—and if I wanted to ensure I could pay for the care I needed, I had to plan for it intentionally.
Using an FSA gave me a way to set funds aside specifically for those expenses. Knowing the money was already allocated helped remove the stress of figuring out how I would pay for necessary services, and the added benefit of reducing my taxable income made the arrangement even more valuable. I started cautiously, initially contributing only the rollover amount because I was concerned about forfeiting unused funds. As I became more comfortable and familiar with my actual expenses, I realized I needed to set aside more—and I have not forfeited any FSA contributions to date.
Periodically reviewing FSA balances and planning for anticipated expenses can help us reduce last-minute financial stress and make the most of this benefit. For many, FSAs can serve as both a budgeting tool and a way to support ongoing health and wellness needs with greater peace of mind.
