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What are the pros and cons to having a medical flexible spending account (FSA) ?

I'm filling out the forms for my employee benefits, and wondering if I should sign up for a medical flexible spending account. I'm young (25) and don't have any major medical issues, though I would be going to the doctor more often than I used to, now that I will have insurance w/ affordable copays. I've never had an flex spending account before. What are the pros and cons.... why should or shouldn't I sign up for it?

Public Comments

1. I think you should sign up, they are great. The money is taken out of your check before taxes, so you don't pay taxes on it. Since you don't have major medical purchases, you should do the minimum (for my company it's $10 per paycheck, which is $240 a year). You can use it for copays at the doctor, dentist, any additional charges like my dentist charges $35 for flouride that insurance doesn't cover, so I pay for it with the FSA. Also if you have any prescriptions like birth control, you can pay for it with the FSA. Some plans even allow you to buy stuff like Tylenol and cough drops with it. So it's stuff you'd pay for anyways, so why not pay with money that hasn't been taxed.
2. Like Kim said, the FSA can be used to purchase many healthcare items with pre-tax money. I use it for everything i can, including glasses, contacts, and prescriptions and Im able to save a decent amount of money doing it that way. The FSA is funded by contributions every pay period. If you get paid twice a month and you elect to put $1200 in the FSA, each paycheck is reduced by $50 before tax. Additionally the $1200 is there immediately, you dont have to wait to build a balance. The catch however, is that if you dont use all the money in the allotted time (used to be Dec 31, but is now April 15) you loose it, so you will have to budget carefully to not put away too much.
3. The pro is reduced taxes. The con is that you lose any money that you do not use. The other con is that you may be tempted to obtain more medical care than necessary, which is counterproductive and tends to harm your health. Generally, the best option is to sign up for the account, but only contribute enough to cover the copays, etc., that you know you will have.