Personal Finance 

How to Set FSA Amount

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The last post on how to spend down your FSA was designed for folks who have just a few dollars left in their account. If you have a few hundred dollars left, you need to do more. You still have to spend it, because FSA balances are lost if you don’t spend it before the year ends, but you need to adjust your FSA amount down to more accurately reflect how much you need. It’s great to have that tax-free money to spend on medical supplies, as long as you need the medical supplies!

This is how we go about setting our FSA amounts.

This post is part of the Bargaineering Annual Financial Review week series where we take a closer look at the four major facets of personal finance and see if we can do better. This post is part of day four – beating back the tax man.


First, consider how many times you’ll be visiting the doctor or other medical professional in an average year. For me, I go to the dentist twice a year and the family physician once a year. The dentist has no co-pay but the physician has a $15 co-pay. Assuming all is well and good, my co-pays each year are a svelte $15.

Medical Supplies Use

Next, go through all the OTC drugs and other supplies you might use throughout a year. I consume Loratadine, the antihistamine in allergy drug Claritin, at about a bottle a year so I need to put that into the sum. We might go through a box of band-aids each year and I use contact lens solution at a rough rate of five bottles a year. I add that all up and arrive at some value for regular medical supplies use.

Special Planning Cases

Most of the major non-emergency medical expenses are planned ahead of time. Perhaps you want to get Lasik vision correction done, you will want to account for that and increase your FSA amount. If you are planning on starting a family, you might want to increase your amounts to account for the increased doctor’s visits. It could be something as minor as planning a cruise, so you’ll add a little extra to buy some sea sickness remedies. Think about the plans you have for the next year and whether you could pay for some of it out of the FSA.


The hardest part about setting the FSA is for the “what if” scenarios. I personally don’t include these in my FSA amounts. The benefit of having the FSA money in the event of an emergency doesn’t outweigh the drawback of being forced to spend that money if an emergency doesn’t happen. However, if you want to include an extra percentage amount (10%) to cover emergencies, it won’t break the bank.

I hope this brief guide was helpful in providing insight into how you can better set your FSA amounts. Did I miss any major categories?

{ 8 comments, please add your thoughts now! }

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8 Responses to “How to Set FSA Amount”

  1. jepoole17 says:

    Don’t forget to account for your medical insurance deductibles, the amount you have to pay out of pocket before you even get to that co-pay. Even on a relatively friendly plan, these can run $300+/person and you can use your FSA to cover those as well.

    • My employer actually has an option (which most people use) that automatically does this (basically using some sort of clearinghouse in the middle, I guess) – no need to submit the paperwork for deducibles/co-pays/co-insurance. Pretty slick.

      • jepoole17 says:

        Your employer’s option automatically accounts for what your deductibles (and co-pays, etc) will be in the coming year? Wow, that is pretty slick…and renders my advice pretty useless 🙂

        What would happen if you go the year without a doctor’s visit? Obviously, that’s not a common scenario, but would you be reimbursed for the deductible since you didn’t allocate the amount yourself? Maybe I’m misunderstanding, sorry.

        • I don’t think I explained it clearly.

          My employer automatically remiburses me from my FSA account when I incur the deductible/co-pay/co-insurance. In the “old days” I’d have to wait for my explanation of benefits and then submit this paperwork to get reimbursed.

          I’m not really sure what you’re asking in the second paragraph. If I don’t go to the doctor, I just have to use the FSA on other things during the year in order to exhaust it.

  2. Revanche says:

    Be sure to check your upcoming year’s changes as well — I just blogged about mine [I have Kaiser, so anyone who has Kaiser HMO can review my post for salient points]. My copays are doubling, and RX costs are tripling – you definitely want to take those changes into account before selecting your FSA amount.

  3. Izalot says:

    If you use a FSA with a debit card, remember to keep all of your receipts. I’ve had friends that used FSA debit card for items at the drugstore then have them rejected later due to not having the receipts!

  4. aua868s says:

    I tend to be conservative while fixing my FSA ammount….better than be stuck with dollars going in the wind at the end.

  5. Chris says:

    Don’t forget that you can use your FSA towards eye glasses!

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