If you're going to throw money away, at least make sure it felt good afterward.
Jan 18, 2001 (Updated Jan 19, 2001)
The Bottom Line Flexible spending accounts are a powerfully useful tool if done correctly. Count the beans wrong, and that's all you'll be able to afford to eat.
Useful Information Follows.
Along with my usual bonus rant.
Timeline: 1884, no wait it’s 2001 and you’ve decided to utilize your company's flexible spending account option. You’ve calculated it to the penny, you know exactly how much
you and your family are likely to spend in the next 12 months on medical expenses, and child care. Mom has her migraines, junior will have the annual broken bone, sissy is all set to make her smile glow with those shiny new braces, and you, well you are dreading your visit to the doctor because it will probably mean prostate something or viagara. Meantime, baby will be being raised by that Goth teen down the street for exactly 45 hours per week.
You get out that trusty Texas Instruments solar powered calculator, which by the way you jumped in early on the T.I. stock and made enough for half a million calculators, and the numbers line up like so many ducks in a row. "Sign zee papers" the human resources lady tells you, "double check the figures and seal zee envelope". It is now in the capable hands of the United States Postal Service to be delivered to the administrator, and all you need to do is track all your receipts and canceled checks and count backwards for the next year.
Fast forward eleven months and what you see in the mirror now are gigantic beads of sweat going south on your forehead. “How could this even be” ? “Are you serious” ?
“This can’t even be close to correct” ! What the hell are you talking about ? Oh yeah, the numbers, it’s all about the numbers. You added wrong. Deep inside your head you hear
the not so faint BUZZZZZZ of wrong answer !
This is the fate of mis-calculation. You find yourself one month away from the end of the year, and you still have eleven hundred dollars left on your flexible spending account with the knowledge there is no way to spend it without rousing the suspicion of the administrator. Guess what happens to the un-spent funds, you forfeit them. Can this be accurate ? It can be and is, and this is what prompted this rant.
Here's the wind-up.........and here's the rant:
The senior mechanic where I work has just garnered the dubious distinction of being the first person I have ever heard of who had this happen to him. He mis-calculated his flexible spending, which is a pre-tax agreed upon amount of money taken out of every check for medical expenses, child care, and other approved by the government needs, by over nine hundred dollars. He scrambled to find anything to spend it on. New glasses, extra medication, anything, but fell woefully short.
We had many and intense conversations about this subject, and all I can figure out is, it is just the banks and the governments way of telling you too bad, you are a sucker and you should have done better. You cannot get any of it back, you cannot roll it over to next year, you cannot get even a percentage of it back. It is simply gone.
This is in my opinion just wrong. Where does the money go ? I haven’t had the wherewithal to pursue this any further out of disgust, and admittedly because it is not my
problem....yet. If you make a mistake on your projected costs, why can’t you just have the government tax it, be charged an administrative fee for whatever paper work may be
incurred as a percentage of the balance and have your mis-calculated, hard earned cash refunded or simply be allowed to roll it over to the next year and reduce your pay in by
that much more then ? To me, them keeping these moneys is akin to legalized theft with no authority above it to appeal to. This man is mere months away from potential retirement, still doing the work of a young man at almost sixty years old, and has to bear the news he just spent almost a thousand dollars on nothing. Does the government need it more than he ? Does the bank ? Any thinking person will answer no to both, and I only imagine you reading this as a thinking person.
My take on this is two fold. 1. Do the above suggested and tax it, fee it, and give it back. And 2. Someone in a position of power should use some of our other hard earned money that we kindly refer to as taxes and change this procedure so the fat will slow down on getting fatter. This practice is wrong, and makes absolutely no sense at all.
The moral to this story is simple, it would be far better to under estimate your yearly expenses and need to spend out of pocket, post-tax money on these areas than to be so
grossly abused as to be penalized by a simple mistake. I have taken advantage of this program to my benefit for years now and have saved many hundreds of dollars that would
ordinarily have gone to re-fueling Air Force One or toward another humidor for Bill Clinton. Instead it helped me take care of my family that little bit better, but one mis-calculation would have canceled that out and any other savings for years to come. Don’t make the same mistake yourself that a hungry, pining-for-retirement old man did.
Bankers and government officials are rich enough, don’t add to their wealth out of your shallow pockets.
P.S. Read the article written by user MADYL for an excellent list down of more things the flexible spending account is there for and its useage. I did, and this is what prompted me to write this, plus the miscarriage of justice to my co-worker.