When Two Wrongs Make a Right

It’s been a tough couple of years for everyone, right? Right. And I’ve mentioned multiple times how I’ve been off my game for the past while. This has resulted in some lapses that I normally just don’t make. The last little bit, I realized I had made two fairly large goofs that were going to cost me some significant money.

Through my job, I put aside $2,750 each year to spend on medical bills through a Flex Spending Account. This is good for tax reasons, but it comes with a couple of stipulations. First, you have to voluntarily re-enroll each year. If you forget to sign up, you don’t get to do it. That’s normally not a problem. I get a reminder each November, and I’ve re-enrolled every year like clockwork.

Until 2021, when I somehow completely spaced it and didn’t re-enroll. (I blame my kitchen.) This meant I wouldn’t have the chance to get the tax benefits, but I wasn’t too terribly upset about it, because I didn’t think those benefits would be too much. (Actually, we can calculate what they would have been. It basically knocks that money off the top of what you earned, so the IRS treats it as if you didn’t earn it, which means it’s not taxed. At my tax bracket, it would have been taxed 22%, which means that by forgetting to do it, I lost $605. It’s not insignificant, and I definitely wasn’t happy about it, but I tried not to beat myself up over it too much.

However.

As I tried to remember through the mists of 2020 and 2021, I couldn’t for the life of me remember submitting a claim for my 2020 flex spending account money. Each year, we just put in a claim in April to get reimbursed for everything we spent the year before, which is always enough to get all our money back. But FSAs are a “use it or lose it” tool. If you don’t get reimbursed for something, then you don’t get the money back from that year. A small amount can typically rollover, but other than that, you’re out of luck.

If I hadn’t submitted a claim, then I would be out $2,750 for that who year, bringing the grand total of my blunders around FSAs to $3,355. That, my friends, is a number that I just can’t let slide. That’s a really boneheaded amount of money to just pour down the drain. And yet yesterday, it looked like that’s just what I had done. I got a letter from my FSA account company that confirmed I hadn’t put in a reimbursement for 2020.

I was, needless to say, not very happy for myself. I read the letter, and then decided to just not think about it until today, because I was too depressed about the loss to face it right away.

Today, however, I cowboyed up and looked into the matter some more. Was there any way I could get some of that money back? It never hurts to ask, right?

Well, after some googling and a few phone calls, I discovered the truth. Because of the pandemic, Congress had altered the rollover rules around FSAs to make it so that your 2020 amount rolled over into 2021, and it could also rollover into 2022. What does this mean for me? It means that while I can’t be reimbursed for any of my 2020 expenses, I can be reimbursed for 2022 expenses, even though I didn’t sign up for the FSA plan for this year. Actually, if I’d signed up like I should have, then I would have had to spend $5,500 this year to get all my money back.

So in the end, by forgetting to sign up for my FSA in 2022, I countered the mistake I made in 2020 of not getting reimbursed.

Mind you, it still means that I’ll lose about $600 in taxes for 2022. The best thing to do would have been to do it right in 2020, 2021, and 2022. But at this point, I’m just grateful to be able to get the money back that I put in. I’ll take my wins where I can get them.

Thanks, Congress! I give you a hard time a lot of the time (deservedly), but you really bailed me out this time, and I appreciate it.

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