by Sue Lesch
With our current economic times, it’s now more important than ever to make sure you’re taking advantage of every possible way to save money. I’m writing this to tell you about my family’s experience using our Flexible Spending Account (FSA) to pay for our NACD expenses. For those of you who don’t know, an FSA is an employee benefit that is offered by many employers. It is a way you can set aside an amount of your earnings before taxes to cover medical expenses for the coming year. In our case, my husband’s employer deducts a certain amount from his paycheck, before taxes, each week. That amount goes into the Flexible Spending Account, and we use that money to pay our medical expenses as they occur throughout the year. Our FSA provides us with a debit card or we can submit receipts directly to them. When we provide receipts, they then reimburse us. The big drawback with an FSA is that you have to estimate what your medical expenses will be for the year. If you don’t use all the money in the account for the year, you lose what you don’t use. That sounds much worse than it is. In our case, it’s been very easy to make this estimate because we include our NACD expenses and have a very good idea what those will be for the coming year. Before you take the step of signing up for an FSA with the idea of including NACD, there are some things you need to do. First of all, you need to talk to your FSA provider. We asked our provider directly if they would cover “home based therapy programs”. They said yes but they would need a letter from our son’s pediatrician stating that NACD is medically necessary. I then approached our pediatrician, who was more than happy to help us out, and I gave him the wording the provider had given me. Below is an excerpt from our pediatrician’s letter.
“I am writing in regard to my patient, Sam. Sam is a 7-year-old with a diagnosis of Down syndrome.
Sam has benefited from a home-based therapy program provided through the National Academy of Child Development (NACD) for the past several years. It is my opinion that it is, and will be, medically necessary for Sam’s health and development that he continues to receive therapy through NACD.”
I’ve talked to several families about FSAs over the past few years. Some have been able to include NACD expenses and some haven’t. Regardless, it’s worth looking into this valuable tax advantage. In addition to NACD, we have used our FSA for glasses, orthodontics, dental expenses, medical co-pays and pharmacy purchases. Depending on your tax rate and the amount you can set aside, an FSA can be worth several hundred dollars per year.