One of my family’s biggest challenges are taxes. We often keep getting pushed into higher tax brackets and now we hover between 24% and 35% depending many different variables each year. To help drive down some of my W-2 income, I opened an FSA account this year and it has been the worst mistake of my life.
FSA Account
You can read about FSA accounts here but in a nutshell it’s a flexible saving account through my employer that allows me to tax defer $3200 in income and use the money for health care related expenses.
The issue I have isn’t with the FSA account but the way the company, Optum, handles all the processes and transactions related to the account.
Endless Receipts
So what’s my beef with Optum? The company provides a debit card to use at medical offices, health care facilities and even some retail outlets like CVS or Walgreens. You’d think in 2024 that health care related expenses would be automatically identified at the point of transaction and this would satisfy all the “IRS requirements” to settle the transaction but that’s not good enough for Optum.
Optum requires detailed receipts showing itemized services for each transaction. I have now had to spend the better part of 20 hours tracking down detailed receipts for everyone in my family for every doctor visit.
FSA Not Worth It
Given the minor tax savings and the endless hours I’ve spent trying to reconcile these receipts and other requirements, I’ve concluded that I won’t ever do an FSA account.
My employer does offer HSA accounts but since we’re older now and require more medical services, it’s not worth the risk doing an HSA where there are many out of pocket expenses, even with the tax savings and growth of the account.
2025 Strategy
I do have a new strategy I will be using in 2025 to reduce my tax rates and I’ll write about that in a future post.
Share The Wealth
Have you had good/positive experiences with FSA and/or Optum? If so, share the wealth and let me know in the comments below.
Thank you for the heads up on your FSA experience. I would have never thought you would have to provide receipts after using the provided debit card. Sounds horrible!
I seem to make that mistake every decade, forget about it then repeat it again. I will be retired by next decade so it’s the last time!
Optum is the worst. Everything about their website makes me want to find their product managers on LinkedIn and shame them publicly.