Flexible Spending Account Review

We have a flexible spending account option through my benefit plan, which allows me to have money deducted throughout the year which can be applied toward out-of-pocket medical costs.  The main benefit with such an account is that the money is deducted pre-tax, so you are avoiding the taxes on the amount you have deducted.  The main risk with such a plan is that it is a use-it-or-lose-it plan, where if you don’t use all of the money in the calendar year, you lose it.

So, as you can tell, coming up with an accurate estimate is important.  If you budget too little, you’ll end up with out-of-pocket costs that miss the tax benefits.  If you budget too much, you’ve wasted money.

I thought it would be worthwhile to do a quick review to see where we stand for the year.

Original Budget

The original budget was done last October  / November.  All of the categories are pretty straightforward, except for the ‘Surgery’ category.  When Baby Beagle was born, they told us that he had a very minor issue which would require surgery, and that having the surgery as a baby was the recommended course of action.  The underlying condition was not life-threatening, but still one that needed to be corrected.  As such, we knew that there would be some costs associated with this procedure (and I’m happy to say it went great!).

I’ll also comment up front on the dermatology costs, which might seem high.  Both my wife and I have minor skin conditions, so knowing that regular visits are required, I used previous years costs as an estimate.  Some of the medications we require can be costly, so that’s why the pharmacy costs seem rather high.

Surgery: $500
Doctor Visits: $75
Dermatology: $200
Dental: $200
Vision: $200
Prescriptions: $290
Miscellaneous: $35
Total Budget: $1,500

Spending So Far:

Surgery: $607.38
Doctor Visits: $15
Dermatology: $117.35
Dental: $85.92
Prescriptions: $228.20
Vision: $98.00
Miscellaneous: $51.46
Total Spent to Date: $1,203.31

At first glance, it looks like we’re in trouble as we’ve spent 80% of our budget, but actually we’re in pretty good shape.  The surgery is done and over.  Between my wife and I, we’ve had most of our preventative dental work done for the year.  We switched dermatologist offices and are all going less than we had anticipated, and my wife is the only one who will probably need glasses, so the bulk of the vision costs are done.

Revised Remaining Budget:

Surgery: $0
Doctor Visits: $85
Dermatology: $45
Dental: $30
Pharmacy: $60
Vision: $50
Miscellaneous: $30
Total Remaining Costs (estimate): $300

If this were to hold true, we would be within $3.31 of our budget, which would be pretty cool.  In looking at our revised estimates, the doctor visits category got bumped up because my wife and I need physicals, and lab testing is recommended, which can add a few bucks.  We also have some anticipated visits for Little Boy Beagle, as he’ll most certainly get sick a time or two once the weather cools.  I also have $30 for miscellaneous, which basically covers over the counter medicines, which are currently covered.  This, however, is the last year that this will be the case as part of the ‘health care reform’ (aka Obamacare) is to remove this coverage.

I’m happy with where we’re at, and barring something unexpected, we should be right on track.  If we’re a little bit under, we have the flexibility this year to fill it in by stocking up on some over the counter stuff.  If we’re a little bit over, chances are it will be a very small amount and we’ll still have gained quite a bit of tax savings on the $1,500 we budgeted.

How are you doing on your health care spending for the year?

Changes To Flexible Spending Accounts On the Horizon

A few months ago, the health care reform discussion was all the rage and dominated most news stories that were centered around politics.

Now that it’s been passed, I think people have moved on.  Most political discussions I hear of now seem to focus either on the upcoming elections or the government’s (lack of) response to the oil spill.

However, I thought it was noteworthy to go back to health care and point out a couple of pretty major changes to those that use flexible spending accounts to save money on health care related costs.

A flexible spending account, for those who may not be familiar, allows you to set aside pre-tax dollars that can then be spent on reimbursable health care costs, including co-pays, non-covered costs, prescriptions, and other items.  This essentially gives you a ‘discount’ equivalent to your marginal tax rate on health care costs.

So, what are the changes/

While I’m sure there are others, there are two that I was surprised about that I think will impact quite a few people:

  • Over-the-counter (OTC) medications will no longer be covered – Many OTC medications and items are currently covered as reimbursable items.  So, right now if you sprain your ankle, and hobble into the drugstore to get an Ace bandage and some Motrin, you can swipe your FSA card, and pay for this.  Beginning next year, this will no longer be the case.
  • FSA contributions will be capped – Right now, many employers will cap FSA contributions at their discretion, but with the new changes, FSA contributions will be capped at $2,500 per year.  I’m not certain on this, but I think this one has a couple of years before it’s implemented (2013 is what I’ve heard). So, if you have out-of-pocket costs over $2,500 and you’ve used a flexible spending account to reduce some of these costs, be prepared to pay more.

Both of these are examples of indirect taxes.  With this model, the government doesn’t directly raise your taxes through an increase in payroll deduction, but by moving things from the ‘pre-tax’ side of the fence to the ‘taxable’ side of the fence, they’ll end up collecting more revenue, revenue which was included in the cost factors that were part of the ‘Obamacare’ bill.

For us, the OTC will mean the biggest change.  It’s nice to be able to buy medicines, bandages, or other supplies, and have them payable by the FSA card.  Since FSA monies don’t roll over from year to year and they’re ‘use it or lose it’, the OTC coverage has allowed people to avoid losing money that they contributed.  Since FSA contributions are often a ‘guessing game’, you might end up with money at the end of the year.  If you have $100 remaining, why not go to the drugstore and stock up on some bandages, cold medicine, nighttime medicine?  Everybody wins, right?  Well, yeah, except the government who was looking at those missed tax revenues.

Were you aware of these changes or did the politicians do a good job at ‘sneaking these in’?  How will these changes affect you?

This Ought To Be Fun

A few posts back, I talked about my wisdom tooth surgery and how they had to do a bone graft to replace bone taken out of my jaw as well as the hole where the tooth was that they removed.  Apparently, a big enough hole wouldn’t have healed well (if at all) by itself, and could have led to problems with my jaw throughout life.

Yes, it’s as fun as it sounds, plus it still gets sore.  I guess the level of grafting that they had to do, it will probably take another two or three months to fully heal.  It isn’t impacting my eating or any activities, but I still don’t eat foods where you have to pull with your teeth/jaw really hard, and if I do use my jaw a lot, I’ll be pretty sore by the end of the day.

But, the really fun part came with the bill.  Apparently, the $900 figure they printed out wasn’t exactly accurate.  I logged online to my insurance website and saw that the claim had been filed in the amount of $2,400.  Yikes!

I really hope that, like so many procedures, the agreed upon amount is a fraction of what the billed cost was.  That would make my 10% co-pay even worse.

Still, since the claim is in ‘Open’ status I’m having nightmares of them denying the claim altogether or revealing that they will only pay up to a certain amount, or something else crazy like that.  Usually, this insurance company has come through in the past, so I’m hoping that it works out fine, but until that claim status goes from ‘Open’ to something more agreeable, I’m a bit anxious.

Wisdom Of Teeth Removal

I had three of my four wisdom teeth removed last week.  I had been in discussions with my dentist about my wisdom teeth for years.  Probably 15-18 years ago, he pointed out that my wisdom teeth were in bad locations and were not ideal candidates for ‘automatic’ removal, which is the path that many dentists / oral surgeons seem to be leaning towards.  The idea behind that is that getting them out in your late teen’s or early 20’s is the most ideal time, as your body can adapt and heal the quickest.

The main reason that he recommended holding off is because my bottom wisdom teeth were in very close proximity to a nerve, and he thought the likelihood of damage outweighed the benefit of taking them out without cause.

So, I was fine for years and years, but then a few months ago, the area around one of the teeth started to hurt.  I went to the dentist, and was told that I had an infection and that once a wisdom tooth started getting infections, it should come out.  We gambled on leaving them in, but unfortunately it didn’t pay off.

I was referred to an oral surgeon. Upon exam, he actually recommended taking three of my four teeth.  He recommended the one on the bottom that was getting infected as well as the two on the top, which had shown progression that would lead to decay of other teeth within a few years. He actually pointed out that the surgery would not be easy.  The bottom teeth, in addition to being close to the nerve, were embedded in my jaw.  The upper teeth would need to be cut out, cracked, and removed in pieces to avoid damaging the roots of the nearby teeth.

He recommended that I get knocked out during the surgery.  I stopped him and said that I wanted to get knocked out just for hearing any more details about the extraction!

The day of the surgery came and things went well. The knocking out portion was the easiest.  They hooked up an IV, and I asked “Did you guys start the medicine yet?”  The nurse answered, “Yes, we just did.”  I said, “That’s what I thought because things started….”

And next thing I know, they were waking me up having extracted all three teeth.

All three of the removals were as complex as could possibly be.  The bottom removal required a bone graft in my jaw.  While they didn’t know if any nerve damage occurred, the graft would reduce the chances of any damage being permanent, as well as reduce the time for the bone to heal, which would minimize my chances for future infections.  The upper teeth both were discovered to be extremely close to my sinus walls.  In some cases, the removal actually breaches the sinus wall, in which case secondary surgery is often necessary to close the sinus cavity.  Luckily, mine wasn’t breached, but because the hole from the tooth was so close, I have to take extra medicine and additional precautions to minimize the risk of blowing open my sinus cavity during the healing process.  This meant trying to avoid any sinus pressure, so I was on medicine to reduce that, as well as not holding in sneezes.

So far, my recovery has had it’s ups and downs.  I am still not eating solid foods.  The fact that they had to do so many cuts and go up so deep into my tissue has made it difficult than a simple yank.  I was also concerned that I was still getting occasional bleeding as late as yesterday (4 days after the surgery) but was told that this is normal given the complexity.

On a positive note, the complications seem to *knock on wood* have been minimal.  If I’d had nerve damage, I would have spots on or around my lips where I would have little or no feeling.  So far, I think I’m in the clear.  I also haven’t had any problems with my sinuses, where if I’d have had any bloody noses or undue pressure, there could have been complications.

If I can get away with the short term pain and not being able to eat solids for a week or so, I’ll take that as long as I don’t have any major complications.

The other fun part will be in dealing with the insurance and financial aspect.  I actually went to a different oral surgeon than my dentist referred me to, for the reason that I wanted to go to an in-network facility.  They were great with working with me, and even had me pre-pay a certain amount knowing my dental coverage.  There will be a little bit extra cost on the dental side because my maximum claim limit for the calendar year was exhausted.  That I’m cool with.  What I also expect to be fun is the bone graft side of it.  That gets billed to my medical insurance.

I had previously called my medical insurance provider to make sure that they covered it, and that the oral surgeon was in network.  Both were confirmed.  The submitted claim price for this was $900, so if everything went according to the way it should work, the most I should have to pay is $90, since my insurance covers 90% of such procedures.  It could be less if they have a ‘negotiated’ price on services, which would be nice.

However, things with the insurance company are never easy, so I expect it will not be as easy as just writing a check for $90 to cover that.  It never is.

All in all, I’m on the mend.  Today is the first day that I’ve felt halfway normal, and I’m hoping to be eating somewhat solid foods by the weekend.  It’s so nice to have goals!

One Reason For High Medical Costs Is All The Paper

The discussion everywhere has been how to reign in or modify the health care system so that costs do not continue to spiral out of control.
One simple suggestion I have is to cut back on all the paperwork!
As I’ve blogged about before, my wife had our first child recently. It’s been four weeks already (and WOW, have they flown by). A few days after he was born, he had a quick visit to the emergency room because of some problems feeding and holding down food. Thank goodness those have been resolved.
But, since we’ve gotten home from the hospital, the amount of paperwork that we’ve gotten has been staggering. There honestly has not been a day gone by in the last three weeks that we’ve opened up the mailbox and found some sort of paperwork.
These have included:

  • Envelope upon envelope of Explanation of Benefit (EOB) forms from the insurance company. Occasionally, they will combine multiple explanations in one mailing, but it’s pretty rare. There are so many providers that have submitted claims, from the hospital for care of my wife to the hospital for the care of our newborn to the provider of the epidural to the OB/GYN office that took care of my wife. The part that annoys me is that they also put the EOB statements online. That’s not the annoying part, but what is is that in most cases, I’ve already logged on and have seen the EOB’s, so the paper copy is redundant, yet there’s no way to go ‘online only’.
  • Bills from all of the providers above. In most cases, they send a separate bill for every item, even though my wife and my son each have one account. In many cases, the balances don’t even add up to the combined totals, so I have to keep track of them to make sure we’re not overpaying or underpaying.
  • Coordination of benefits form – My insurance company decided that now would be a good time to confirm that my family does not have coverage through another insurance plan. So, they sent a five page questionire to me. The great thing about it is that for me to say ‘No’ (which was the answer) involved me checking one box and signing my name. A complete waste of paper, and something that I could have easily done online had this been an option (it’s not).
  • FSA reimbursement forms – We are using our Flexible Spending Account money to pay for most everything. The company that administers this requires a receipt for most purchases so that they can verify that the purchase qualifies. Thankfully, ADP has gotten themselves together to where they don’t send a paper copy of this request in the mail. They actually e-mail it. Still, they don’t allow me to scan in the receipts. I have to mail or fax them. So, I have to print out a copy of their claim form and head over to the fax machine. They’re the most electronic of the bunch, but it’s still one giant waste of paper as far as I’m concerned.

It gets worse.
Because the insurance company chose to have me fill out the coordination of benefits forms, they delayed payment on over half of the bills that came through. Yet they sent EOB forms to let us know that they were ‘Pending’!
Gee, thanks!
So, not only do I have a pile of papers letting me know that nothing has been done, once they re-process the claims, they’ll surely send brand new EOB forms for every single claim with the adjusted amounts.