Using Health Reimbursement Plans to Reduce Medical Expenses
Medical expenses are a growing part of every family’s budget. Although there are many areas of the budget that can be whittled down when money is tight, medical expenses are much harder to skimp on. Medicines and doctor’s visits are important, regardless of your financial circumstances.
Fortunately, health reimbursement accounts can greatly reduce the real cost of many medical expenses. These IRS-sanctioned plans allow employers to take money out of your paycheck to cover your medical expenses. Since the money is withheld from your paycheck and the plan is administered according to IRS guidelines, these withholdings are made before the taxable amount of your paycheck is determined. Simply put, you won’t have to pay taxes on those withholdings. This tax savings can be as much as 20% of the withholding for some people.
To sign up for your employer’s health reimbursement account, you should see your human resource person. Once you’ve determined when you can enroll in your employer’s plan, you’ll need to decide how much money you’ll need to set aside during the plan year. Make your calculation carefully, since funds that aren’t used by the deadline can’t be returned to you.
After you’ve enrolled, you’ll need to save your receipts as you make eligible purchases. Co-payments to doctor’s offices, over-the-counter drug purchases, and even first-aid supplies like bandages are all eligible for reimbursement under these types of plans. Submit these receipts according to your plan’s guidelines and you will receive a reimbursement for them from your payroll withholding.
Purchases that are to be reimbursed from this plan should be made within the calendar year of your withholding. Some employers will extend a grace period for a few months after the first of the year, but you should verify that grace period with your employer. Also, once you enroll in the plan, you should know that you often can’t withdraw from the plan until the end of the year.
Enrolling in your employer’s health reimbursement plan is a great way to save money on purchases that you were going to have to make anyway. By simply doing a little paperwork and keeping track of your receipts you can control the costs of these necessities and eke a little more out of your family’s pocketbook.
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This is a good article, and It’s an issue my husband and I have been going back and forth over. I’m going to print it so we can look over it together. Thanks!
This is not a bad idea if you don’t have to go too often. My family and I take care of ourselves which leads to fewer doctors visits. We have insurance but don’t need it much. THis is not a bad option.
Jerry
http://www.leads4insurance.com
[...] Using Health Reimbursement Plans to Reduce Medical Expenses from Not Made of Money. My employer doesn’t offer such a plan and I don’t make enough to make a HSA beneficial to me but if I did I would definitely take advantage of this type of plan. [...]
[...] Made Of Money has a post that’s a must-read for anyone who has an option for a health reimbursement account or a health savings account with [...]
My emploer doesn’t offer this type of plan either.
I need to find out more information on HSP’s in general, I guess. Thanks for the post though, it was great!
oops, i meant HSA acounts.