Planning for Success: Prepare Your Medical Spending Record – Day 20

Planning for success - Day 209

Photograph Credit: iStockphoto

Knowing that a successful year will not materialize on its own, we must plan and prepare for a prosperous 2013.

Throughout the 31 days of January, I will choose one topic each day to prepare or schedule for this year.

Without preparation, I know I will forget, miss, or overlook certain items. If you desire an organized year, then join me in this adventure of Planning for Success for a prosperous 2013.

To receive a daily e-mail around 11:00 a.m. with the new posts of each day, subscribe to my free daily newsletter. In case you miss a post in this series, I will provide the link to each day as the month progresses. 🙂

Day 20: Prepare Your Medical Spending Record

Keeping the paperwork under control is an ongoing battle. Between the mail and on-line statements, the documenting and checking this information continues.

One set of documents that comes monthly is our medical spending statement. Having explained in detail the benefits of a medical spending account or a health savings account, I advised Paul to enroll again for 2013 which he did. 🙂

Having determined approximately how much we plan to spend in medical expenses for 2013 at our open enrollment session, we signed up and received confirmation of the changes from 2012. Taking that information and verifying against our request, I recorded the information on my Medical Spending Record.

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2013 Medical Spending Record

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With 5 columns, I record the dollar amount, date, transaction, date processed, and balance.

1. Dollar amount: The amount spent or deposited.

2. Date: The date of service.

3. Transaction: Description of payment (e.g., Tracy’s doctor’s visit, Paul’s prescription, Tracy’s contacts, etc.).

4. Date Processed: The date the transaction cleared your account.

5. Balance: Total amount left to spend for 2013.

By recording our medical payments to our Medical Spending Record, I can quickly verify the information when the statements arrive and know our balance left to spend.

For those of you using a Health Savings Account (HSA), your financial institution should provide a saving register for your information. With your HSA, you will have deposits, withdraws, and dividends. As you prepare for 2013, keep your account balanced.

In planning for success, prepare your medical spending record. I have used the Medical Spending Record for a number of years. The simple spreadsheet tracks our expenses and payments, so I am sure to use all these funds for our medical expenses this year.

As you scrimp and save this year, follow your Medical Spending Record to prevent unused medical funds at the end of 2013. Remember, you will lose what you do not spend in this account. The advantage is using pre-taxed dollars for your medical care.

When not in use, file your Medical Spending Record within your insurance file under category Tax-favored Programs. Happy organizing!

Question: How do you prepare for your family’s 2013 medical expenses?

Tax-Favored Programs: Dependent Care Spending Account

Excitement time! Today, we will complete our fourth category in our insurance document file. Yeah!

Remember: Your file will hold the insurance policies you carry. If you do not have one of these policies, then just skip it. This series is not meant to place pressure on you to buy more policies. I only share how I have organized our important documents.

Within this category, we have filed our Health Savings Account (HSA), Pre-Tax Group Insurance Premium, and Medical Spending Account documents. The last set of documents in this file opening is the Dependent Care Spending Account paperwork.

NOTE: I have never had this type of spending account. Though I have researched and understand the savings through this program, I can only offer information and not my experiences.

I have had the wonderful privilege of staying home with my children, and when needed, we have close family and friends to babysit for us. We are very fortunate and have not needed a dependent care spending account. However, the benefits are worth having one if you incur dependent care expenses which is why I am devoting a post for this type of account.

Dependent Care Spending Account


A Dependent Care Spending Account is an IRS tax-favored account you can use to pay for your eligible dependent care expenses to make sure your dependents (child or elder) get care while you and your spouse (if married) are working. Withdrawn from your salary before deducting taxes, these funds allow you to pay your eligible expenses tax-free.

Types of Dependents

Check your policy, but usually dependents are individuals residing in your household for at least eight hours a day including:

      • Children 12 years or younger and
      • Adults or children mentally or physically incapable of self-care

Eligible Expenses

Changes occur to the law and policies, so check your policy. But some of the eligible expenses may include:

      • After school care
      • Baby-sitting fees
      • Day care services
      • In-home care/au pair services
      • Nursery and preschool
      • Summer day camps (but not overnight camps)

Ineligible Expenses

Most Dependent Care Spending Accounts will not reimburse for the following expenses:

      • Books and supplies
      • Child support payments or child care if you are a non-custodial parent
      • Health care costs
      • Tuition costs
      • Services provided by your dependent, your spouse’s dependent or your child who is under age 19


Possible Fees

Our policy would charge a $2.50 administration fee per month along with our $.12 per month for the pre-tax group insurance premium (since these fees get paid with pre-tax dollars). Each policy has its own fees and regulations. Just check with the employer for specific requirements.

Availability of Funds

Once you sign up for a Dependent Care Spending Account and decide how much you want to contribute, the funds available to you depend on the real funds in your account. Unlike a Medical Spending Account, the entire annual amount is not available during the plan year, but rather after your payroll deductions get deposited.

For example, if you incur $500 in dependent care expenses and your account from payroll deductions has a $400 balance, then you can only get $400 in reimbursement. Once the next payroll deduction amount reaches your account, you can request the remaining $100 reimbursement. This is only an example. Your provider may only allow one reimbursement per bill. If that is the case, then you would need to wait for the next payroll deduction to submit the $500 bill for reimbursement.

Losing your Allotment

Similar to the Medical Spending Account, any money remaining in your account cannot be returned to you or carried forward to the next plan year. Be conservative in your estimates and abide by the limits on the Dependent Care Spending Account.

Using Time Wisely

The other cost is your time. You will need to supply information about your caregiver to your provider and then prepare and send forms for reimbursement. Your time is valuable, but in using time wisely, you can save hundreds of dollars on dependent care through this savings channel.


If I had a Dependent Care Spending Account, I would keep the following documents in this file:

1. Notice of enrollment showing the payroll contribution amount

2. Forms or instructions for filing for reimbursement

3. Correspondence from your provider including explanation of spending account and privacy policies

With these documents gathered, I would paper clip them together and place them behind our medical spending account paperwork. If you do not have this account, like me, then your file will not have this information.

I do keep some documentation about this type of account in our file because I may need it one day. If I need to return to the workplace and our children or our parents need care during the day, then we can enroll in a Dependent Care Spending Account.

Congratulations on completing another category in our insurance file housed in Box 2. You are making progress. Keep up the great work while using time wisely. Happy organizing!

Question: Do you use a Dependent Care Spending Account? If so, what would you add to this list?

Tax-Favored Programs: Medical Spending Account

Reaching the halfway point of the tax-favored programs, we have two more sets of documents to add before completion. 🙂 Filed in this category are the Health Savings Account and Pre-tax Group Insurance Premium. With only the spending accounts remaining, I will begin with the medical spending account.

Medical Spending Account


A Medical Spending Account allows you to pay for medical expenses with pre-tax dollars, up to $5,000 per year. For our medical spending account, we estimate our eligible medical expenses (doctor’s visits, prescriptions, glasses, contacts, etc.) for the year. The total amount chosen gets divided into equal installments that get deducted from Paul’s paycheck. The deducted amounts get paid into our account for these medical services.

For our plan, we chose the debit cards. This option allows us to pay for the medical expenses with this card. Without the debit card, I would pay out-of-pocket and then send copies of my receipts for reimbursement. As long as I pay with the debit card and the services are eligible, then I do not have to fill out any forms for reimbursement.

One benefit to this program is that the entire amount allotted for the year becomes available on the first day of the plan year. If we estimated our expenses to be $1,000 for the year and we have an emergency surgery on January 2, then we can use our debit card to pay $1,000 of that bill on January 3. The chosen amount would still get deducted from Paul’s paycheck all year, but the funds are available for use immediately.


Possible Fees

To use the Medical Spending Account, we pay a $5 annual enrollment fee, and then a $2.50 monthly administrative fee along with our $.12 pre-tax group insurance premium (since these fees get paid with pre-tax dollars).

For the year, we spend $36.44 for the benefit of using pre-tax dollars for our medical expenses. This cost is worth the savings for our family since we do not pay enough in medical expenses to claim on our taxes.

Losing your Allotment

Another cost to consider is losing the money in your account. If you estimate your medical expenses to be $2,000 and you only use $1,000 by the end of the plan year, then you lose $1,000. Ouch! To be wise stewards of our finances, we underestimate our expenses to prevent losing money.

Though our plan allows until March 31 of the next year to use those funds, we spend all the allotted money by December 31 of the plan year. If you have a medical spending account, plan wisely to maximize your savings.

Spending your Time

Other costs are your time. Due to federal regulations, I receive a monthly statement indicating all the charges on the issued debit card. To verify these charges, I must fill out a form documenting the provider, patient, dates of service, and amounts and then fax that form with itemized receipts to our medical spending account provider. Though the cost savings is worth the extra effort, you will spend time providing documentation.

With all my documents filed, this process does not take long. However, it will take more time if you do not have the proper documentation. I am not trying to dissuade you from a medical spending account because I love it and use it every year. However, I want you know the ramifications of enrolling before taking the plunge.


The paperwork I keep for our medical spending account in this file includes the following:

    1. Notice of our enrollment with amounts chosen

2. Benefits guide explaining the program with instructions for submitting forms

3. Photocopies of the front and back of our debit cards

4. Correspondence from provider

Other items already in the file from other programs:

      • The brochure explaining the tax-favored programs
      • Privacy policies of provider

These documents stay together in this sixth file opening with our tax-favored program paperwork. The receipts and forms for this account are kept in our insurance files. These files are separate from our important documents system. My current important documents filing system could not hold the annual paperwork of our medical spending account. So, to keep the insurance documentation separate from the receipts, reports, and prescriptions, I keep different files.

As you continue using time wisely to organize your important documents, remember that your file may or may not have these similar types of insurance. Just adjust your file to your needs. I am not a financial planner, doctor, lawyer, or advisor. I am a mom, who researches and helps choose options that will benefit my family while using time wisely. Happy organizing after celebrating this joyous Easter Day!

Question: Do you have a medical spending account option?

Tax-Favored Programs: Pre-Tax Group Insurance Premium

What a special day! Palm Sunday and April Fools’ Day! Just know that if someone throws you a curve, be ready for an April fools’ joke. Since playing pranks is not a typical activity in our household, this day usually occurs without incident. However, I never know what a day may bring. 😉

Last week, we began the next category in organizing our important documents. I began the tax-favored programs’ category with Health Savings Account (HSA) documents. Having had an HSA in the past, I kept those documents within this sixth file opening. Today, I will continue with this category focusing on the documents within this file slot now.

Summary Page

At the beginning of each category, I include a summary page with details on these accounts. Since I no longer have HSA documents, I place this summary page first which is before the pre-tax group insurance premium documents.

Pre-Tax Group Insurance Premium


Our pre-tax group insurance premium allows us to pay our health, dental, vision, and life insurance premiums with pretax dollars. When enrolled, our insurance premiums get paid first. Then the tax calculation runs the remaining paycheck amount before deducting the proper tax amount.

By paying our insurance premiums with pre-tax dollars, we get the tax benefit immediately. No forms or calculations need to be kept for tax preparation. What a great benefit!


With Paul’s current employer, we have the choice of accepting or rejecting this option. Since I cannot imagine rejecting this option, we accept it at a cost of $.12 per month or $1.44 annually, deducted before taxes. For us, the cost is minimal compared to the hundreds of dollars we save each year.

Our pre-tax group insurance premium provider offers the pre-tax option and the spending accounts: medical and dependent care. Though the one insurance company provides all three types, we can choose to enroll in  none, one, two, or all three of these benefits.

At Paul’s previous employer, the pre-tax group insurance premium was an automatic benefit to us at no cost. Each business operates differently. If you are not sure if you have this option, you can contact the benefits’ administrator through the issuing employer for answers.


In my file, I have these following items housed behind our summary page:

1. Confirmation Notice of enrollment in the pre-tax group insurance premium feature

2. Brochure detailing the insurance premium feature

3. Privacy practices of issuing insurance company

Keeping these documents together and housed in the same file opening as the spending accounts, I can quickly find the information if a problem arises.

In using time wisely, I researched the pre-tax group insurance premium option and discovered that the benefit was worth the annual $1.44 cost for our family. As you organize your important documents, consider reviewing your options. You might be missing benefits that will save you hundreds of dollars. Happy organizing!

Question: Do you have access to a pre-tax group insurance premium?

Tax-Favored Programs: Health Savings Account

In organizing our important documents, we completed Box 1 and continue working on Box 2.

Having finished the first three categories in our insurance file, we begin category 4: tax-favored programs.

If you have multiple types of tax-favored programs and need more than one file slot, then adjust this system to work for you.

My single file opening houses the following types of documents:

Tax-Favored Programs

  • Health Savings Account
  • Pre-Tax Group Insurance Premium
  • Spending Accounts
    • Medical Spending Account
    • Dependent Care Spending Account

Health Savings Account


A Health Savings Account (HSA) is a tax-free account used to pay health care expenses. Though Paul and I do not now hold a health savings account, we once did.

We opened our account through Paul’s employer. The designated amount we chose to contribute to this account was automatically deposited during each pay period. We owned the account, and the funds, including interest, accumulated tax-free.

Note: With a HSA, the funds do not have to be spent in the plan year. This means that you can contribute up to the maximum each year and continue accruing interest for years.

After contributing to our HSA and then changing plans, we continued to use the remaining funds in our HSA for our qualified medical expenses. When we exhausted the funds, we closed our account.


To contribute to a HSA, you

    • Must be covered by a high-deductible health plan,
    • Cannot be covered by any other health plan, including Medicare, and
    • Cannot be claimed as a dependent on another person’s tax return.


When we held our HSA, I kept the following documents in this file opening:

    1. Enrollment paperwork
    2. Annual payroll contribution records
    3. Monthly statements from our financial institution
    4. Copies of the front and back of our Visa debit cards
    5. Correspondence from Paul’s employer and from the financial institution

These documents were paper clipped together and housed in this file opening.

To get another perspective, Jim Wang of offers a HSA vs. HMO Analysis from the experiences of one of his loyal readers. Jim will be guest posting on Using Time Wisely this Wednesday, March 28, so come back for more valuable information on ways to using your time wisely.

As you continue gathering and filing your important insurance documents, you are using time wisely. Enjoy looking back to admire your progress because you are doing great. Happy organizing!

Question: Do you prefer a HSA, HMO, or PPO?