You can lead a horse to water...
There is this myth among conservatives that all we need to do to break people of irresponsible habits and make them more fiscally conservative is to make them pay their way. It's a nice idea that isn't born out by reality. Not only are most people irrational with regard to economics, but they're downright lazy. They won't save, even in a 401k, they won't take advantage of FSAs and they certainly won't clip coupons unless it's what the cool kids are doing. The best--the best--that can sometimes be expected is comparison shopping.
The federal government could create a program opening up FSAs to every worker in the United States, and the 22% figure probably wouldn't budge forward by more than a few percentage points. People want to have their cake and eat it too. Being American means being prosperous, and being prosperous means never having to cut back on the finer things in life or find ways to save money.
Need any more proof that humans aren't as rational as economists assume? Look at flexible spending accounts, a benefit that can put hundreds of bucks in your pocket. About 80% of large employers offer FSAs, but a mere 22% of their workers enroll, according to the consultancy Mercer.Unless you can afford to light cuban cigars with hundred dollar bills, you have no good reason to not take advantage of a FSA if your employer offers you one and you spend more than a few hundred dollars a year on all medical expenses. It's so simple and responsible that it's no wonder so few people actually do it! All it takes to calculate the approximate funds that you need to stash away is to list your typical expenses at doctor's visits, prescriptions and throw in an additional 5-10% to cover the unexpected. If you know that you are going to have a major operation or a child, then dump as much money as you can afford in it, and all of those medical expenses will come out of your pre-tax income.
An FSA allows you to set aside part of your paycheck for health expenses. (The exact limit depends on your company, but it's usually $2,000 to $5,000.) You don't have to pay income or payroll taxes on that part of your earnings. So if you are in the 28% bracket, a $1,000 FSA may save you about $350. Money in your FSA can usually be used to cover co-pays and deductibles, prescriptions, and even over-the-counter drugs. These plans used to require paperwork, but that excuse is gone. Many now offer debit cards and websites to track and manage your spending.
There is this myth among conservatives that all we need to do to break people of irresponsible habits and make them more fiscally conservative is to make them pay their way. It's a nice idea that isn't born out by reality. Not only are most people irrational with regard to economics, but they're downright lazy. They won't save, even in a 401k, they won't take advantage of FSAs and they certainly won't clip coupons unless it's what the cool kids are doing. The best--the best--that can sometimes be expected is comparison shopping.
The federal government could create a program opening up FSAs to every worker in the United States, and the 22% figure probably wouldn't budge forward by more than a few percentage points. People want to have their cake and eat it too. Being American means being prosperous, and being prosperous means never having to cut back on the finer things in life or find ways to save money.
I will look into this. But as you say, the last time I looked, it required so much paperwork, that I was becoming a self-reimbursing medicare where it could take me 30-60 days to get my own money out of the plan. And bad things happen on 1 Jan, leftover dollars dissappear, un paid service from december stay unpaid. Might be worth a second look.
My FSA is easy. You keep all of the receipts, and you fax them in. There is a web application which prints a cover page that has all of the information that the FSA needs in order to process the claim. We saved good money this year on just a $1000 account. We're bumping it up to $4000 next year since we hope to start a family.
Personaly I like the HSA over an FSA due to the fact that the money put in never goes away. It is yours until you spend it or you die and when you die it goes to your Benificiary. Also payout is instant and has the same pre tax benifits.
For a lot of FSAs, payout is instant as well. I have a debit MasterCard for my FSA which I can use to make an instant payment at a pharmacy or doctor's office.