Flexible Spending Accounts are a fantastic employer benefit that everyone should take advantage of. It allows you to save on medical expenses by taking payroll deductions and putting them into an account you can use on things like over-the-counter drugs, prescription drugs, co-pays, etc. (more about FSAs and other medical accounts) One great loophole with FSA’s is that you don’t need to pay back the overage if you leave your job mid-year.
For example, let’s say you opt to put $600 into your FSA for 2008. Each month in 2008, $50 will be deducted from your paycheck for funding your FSA. On January 1, 2008, you are able to spend the entirety of the $500, even though you haven’t been billed for anything. If you leave mid-year, you don’t owe anything if you spent your entire FSA. That’s right, so that means you can request $3,000 in your FSA, perhaps get some Lasik done, and then leave in June only having paid $1,500 pre-tax of the $3,000.
The reason this is possible is because any amount you fail to use in the year is forfeited, so the money balances out.
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