While medical costs are up about 8.5 percent, prescription drug costs have risen about 17 percent in the last year. If you are taking drugs under a prescription, it could save money to consider a health plan that includes those drugs on their formulary or pre-approved list. If your employer allows you to contribute to a health care spending account, consider it carefully. First, you must elect in advance an amount to deduct from your pre-tax pay to deposit on account with your employer. Second, to get the money out of the account, you must present receipts for qualifying medical expenses.
Money is withdrawn as reimbursement for expenses and is never taxed.
A wide variety of medical expenses qualify and even medically necessary alternative health treatments will qualify for this tax break. See IRS Publication 502 for a list of what is allowed. Do not default Make sure to process your enrollment forms for benefit elections before the deadline. If you do not, the default is typically the coverage option you had last year, which has likely increased in cost and changed significantly. This default choice will likely be coverage you don't want or that does not best fit your needs.