How often do you get your flexible savings account moneys?

Every month $555.55 is taken directly from my paycheck and put into a dependent daycare account.

Every month I write a check to the daycare for $630.

I do not, however, request a reimbursement every month from the DDA.

Instead I tend to let the months build up and then sometime during breaks (usually Winter, Spring Break, and Summer) process the DDA paperwork, get the required signatures, and fax the signed papers to the DDA folks.

Then a few days later, I get a lump sum deposited to my savings account.

Why don’t I just request the money every month?  Two reasons.

1.  Effort.  It takes a lot of mental load to remember to process the paperwork AND take the forms to daycare AND pick them back up again AND fax them in.

2.  $555.55 is a lot less than $630.  If I let a few months build up, then I don’t have to deal with claim denials followed by the additional $74.45 a month later followed by some smaller number than $555.55 etc.  (It used to be I’d have to redo the denied part if I over-requested, but now they send it automatically when the coffer gets refilled, which is nice.  Also the direct deposit is much nicer than the checks they used to send.)  I have a much better idea of how much is left when I do it in lumps and keep all but the last reimbursement under the amount actually in my account.

Another reason that might make sense if we were tighter on money (and therefore the effort cost might be worth it) is that this DDA can serve as an additional emergency fund– additional savings not in the checking account that could be tapped into in case of emergency.  We used to treat credit card savings like that, but these days the amount of credit card rewards isn’t the difference between us being able to buy groceries or not that week.  $555.55 isn’t chump change, but our emergency fund these days is large enough to cover most such emergencies, even including things like unexpectedly large tax bills or months late travel reimbursements.  Yes, rationally it still makes more sense to keep such money in an interest-bearing account, but not being able to see it still has psychological advantages when it comes to budgeting when you don’t have a lot of slack to play with.  (And #2 adds that interest-bearing accounts don’t pay bupkis these days.)

I do process travel reimbursements and rebates right away, but that’s mainly because if I don’t, I’ll lose the receipts or forget about processing them at all.  Plus, there’s also no advantage to putting it off– the same number of steps need to be taken no matter when I do the reimbursements– I can’t just do all of my travel for the year at once in one step.  With the DDA, I could, in theory, put it off until we’ve spent $4999.95 or whatever I’ve put away for the year on daycare and I’d only have to get one signature and do one fax.  I don’t do that either– usually I request 3x/year.

Do you request flexible spending account money and credit card rewards as soon as you can or do you let them build?  Why or why not?


26 Responses to “How often do you get your flexible savings account moneys?”

  1. Jenn Says:

    Why do you have $555/month taken out instead of just spreading the $5,000 evenly over the year? Just curious :)

    I wait until I’ve spent $5,000, do one claim and it gives me a lump sum for part and then the amount monthly for the rest of the year ($416) as it fills up.

  2. TheologyAndGeometry Says:

    I just do it each time I get a receipt from the daycare provider. It sounds like our reimbursement process is a lot simpler than yours – I just submit an e-receipt, no extra forms or signatures needed – and it takes like a minute. Even if it was more efficient in the long run, I wouldn’t want to have to sit there and submit a year’s (or even a quarter’s) worth of weekly receipts all in one go.

  3. Linda Says:

    I have a healthcare FSA and I handle some of the transactions in a similar fashion. A few years ago we were issued a debit card tied to the FSA account, so for prescriptions and office co-pays where Visa is accepted, I use the debit card. But there are enough other situations where I cannot use the card that I let the receipts pile up and submit them about twice a year. Then I get a paper check from them that I have to mail in to my online bank account (’cause the photo deposit app doesn’t work well for me with large format checks).

    These days the “thrill” of having a big lump sum from the FSA reimbursement is fairly negligible for this reason and the fact that there is now a $2,500 cap on FSAs instead of the good ‘ol days of a $5,000 cap. I’ve already blown through all but $9.98 of my FSA funds this year due to all the physical therapy I’m doing to address the bad foot/leg (the one where I broke the ankle at the beginning of summer and where the plantar fasciitis has flared up again).*sigh*

    I do a similar thing with credit card rewards. My Discover card rewards are close to $400 right now. I’ll apply it to the balance by the end of the year, most likely. I don’t use them right away ’cause I really like to see them build up and think about how applying them is paying for something special or out of the ordinary, like a plane ticket for a nice vacation or (in this case) hotel rooms for the cross country road trip to my new life out west. :-)

  4. Debbie M Says:

    When I had a health FSA, I just waited until I had an expensive thing. Then I requested reimbursements for all the things I had paid for so far. My hassles weren’t that bad–just dealing with the fax machine and having to come back several minutes later when it spit out a receipt. Plus my company pretty much approved everything instead of being scummy. But it was much more motivating after an expensive thing. And it seemed rude to request processing separately for every little thing. You could get a debit-card like thing, but it was pricy ($13/year?), so I didn’t.

    For my HSA, I was just leaving it all in there because of tax-free interest. Plus they were paying a higher interest rate than my savings account. But now the interest rate has fallen. The only remaining benefit is that belonging to that credit union is giving me a break on one of my insurance rates. I may close it one day just to simplify my finances a bit. So far as I know, I won’t be qualifying for an HSA ever again.

  5. Ana Says:

    I put one daycare bill in (for a 4 month period for both kids) and that exceeds me yearly FSA reimbursements, so I then get a little back automatically each pay period. Only because its the easiest way to remember—one year I completely forgot and forfeited the entire yearly contribution. I”m not joking. I just FORGOT. It was traumatic. Now I have it on my calendar to do 4 months into the academic year (i.e. soon).

  6. xykademiqz Says:

    I am deeply envious that you pay $630/mo for daycare…

    • nicoleandmaggie Says:

      Don’t worry, next year I will pay 2x that. (Also I pay a bit more for private school for the oldest.)

    • Leah Says:

      We pay $173 per week, so roughly $700/month. Maybe it’s a midwestern thing? I can’t imagine paying more. No idea what we’ll do when we have more kids and when we reach the point that it’s better for one of us to think of staying home. I’m always envious of friends who have their parents/relatives who can watch the kids.

      • xykademiqz Says:

        We pay $1200/mo now that the “baby” is over 3 so he is in the oldest (preschool) group. When we had two in daycare (baby and preschooler), it was like $3200 per month for the two, nearly another house payment. Luckily, that was only for a year. There are several families who have three in daycare, or two in daycare and one in private school. I have no idea how they afford it. It puts in perspective that professors don’t actually earn all that much compared to people in the corporate world (I am what one would consider a well-paid academic, and we barely afforded two in daycare).

    • Leigh Says:

      Yup the most convenient daycare to my office is $2500/month/kid. It’s insane. I don’t know what the people do who haven’t started their retirement compounding before kids. Less convenient ones run $1500-2000/month/kid.

      • Leah Says:

        omg, that is more than I take home. If daycare cost that much, I’d see if I could take a leave of absence from my job or something. Or pay a friend to watch our kid. My friend and I thought about it, but she homeschools her preschooler and has a baby the sameish age as mine. We mutually decided we didn’t want to put too much on her.

  7. Leigh Says:

    With my HSA, I would always take the money out when I paid the bill. It’s sync’d up with my health insurance, so it knows when I have claims and this way, I could use it as a way of tracking where the out of pocket had been paid and where it hadn’t.

    I remember with healthcare FSAs, the money is all there right away even though you haven’t paid it all into the account. Is that not the same with dependent care FSAs? I always took the money out as soon as I had an Explanation of Benefits with the FSA since it wasn’t earning any interest.

    • Leah Says:

      Wish I could do this with my HSA. I just started the HSA this year and have already used my deductible. My HSA only has some money sitting in it, as I did even deductions per paycheck. I’m just pulled the money out as needed (say, to max out my Roth IRA or pay off one bill).

      FSAs for healthcare do have the money all up front, but the dependent care one doesn’t seem to work that way. At least, I don’t think so. This is my first year with dependent care.

      I feel like money is such a big shell game some days.

      • Leigh Says:

        I maxed out my HSA the year I had one and I got lucky that I only had expenses once it had some money in it. I’ve left the money there instead of transferring it somewhere that it could earn more money since it’s so easy to get money out when it’s attached to my health insurance…

  8. Leah Says:

    Query on daycare reimbursement: this is based on the calendar year, yes? We are on a school year mentality, and it is always rough for me to think about taxes and money made, because I think about my earnings from Aug through July. That’s our contract.

    Can we file our last reimbursement after Jan 1 for daycare the previous year? If yes, we should probably just wait until then and file for everything we’ve spent since our little one started in September.

  9. MutantSupermodel Says:

    For dependent care, I only had a smallish amount pulled aside as I knew I couldn’t afford much in summer camp this year. So I opted for a small amount and will actually be claiming it soon. My plan was to leave it untouched until the end of the year so I could use it for Christmas shopping.

  10. plainandsimplepress Says:

    I used to collect at the end of the year. Dropped all the eligible receipts into a file folder and then made out just one form and mailed it in with just one postage stamp.

    BUT…I didn’ t have dependent care. Probably if I’d been paying day care out of biweekly paychecks, I would’ve begged for the money once every month or two.

    Aggravating won’t let me sign in as myself. This is Funny about Money.

  11. Nolo Says:

    Is there an option to submit a contract for your daycare expenses to the company that manages your DDA? The company that manages my university’s flex accounts has a form that you can submit w/the daycare manager’s signature and information about how much you pay each month to the daycare. I do that and each month, without submitting any extra paperwork, get $500 deposited to my checking account (10 mo contract so that’s my contribution each month and daycare is more than $500). Just a thought.

    • nicoleandmaggie Says:

      It will pay the daycare provider directly (but it takes the same amount of paperwork as getting reimbursed), but it won’t auto-deduct.

      • Nolo Says:

        Bummer. There aren’t many things my university and state make easier but this is definitely one of them! I might tread my DDA as forced savings if I had to do the paperwork on a regular basis to get reimbursed.

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