FSA election question (dependent care and health FSA)

[Susie]

MH and I both work full time and have access to a full suite of benefits including health FSA, HSA (if qualified), limited purpose FSA, dependent care FSA, etc.  H carries our health/dental/vision since he has access to better plans than I do, but I need to figure out some of the ancillary stuff.

We will have a lot of dependent care and health expenses in 2019, so I want to max out pre-tax savings for those:  one kid in daycare now, will add a 2nd kid in daycare in August, I have ~$1700 left to pay on my Invisalign, copays associated with labor & delivery in June, etc., etc., etc.

1) For a dependent care FSA, the 2019 max is the same as 2018:  $5k.  Even though there is nothing on the front end to prevent him from electing $5k and me from electing a second $5k, my understanding is that we can't both do it because we are limited to $5k (household) pre-tax for dependent care on our MFJ 1040.  Is that correct?  For 2018 I just had him do the $5k and I passed on it.

2) We don't have an HSA because we don't have a HD health plan, so we are limited to using an FSA to save pre-tax dollars for, e.g., contacts, my Invisalign, copays, etc.  The 2019 max for health FSAs is $2700.  For health FSAs, we can each separately elect $2700 (household total $5400), unlike the DC FSA, correct?  (This doesn't make sense to me, but is consistent with what I have read.)

Thanks for any advice.

[minionkevin]

I’m pretty sure FSAs have a household limit of $5k for DC and $2700 (did this go up? I could only elect $2650) for health.

[calico]

I can't speak to #1, but for #2 you are correct.

[minionkevin]

Have you considered a HDHP to put away the $7k/year in the HSA?

[arch01]

Nov 28, 2018 11:28:22 GMT -5 minionkevin said:

I’m pretty sure FSAs have a household limit of $5k for DC and $2700 (did this go up? I could only elect $2650) for health.

It went up about 10 days ago-it was VERY late to be announced.

[kellygreen]

My understanding is that it's a $5k per household limit.

[Susie]

Nov 28, 2018 11:30:04 GMT -5 minionkevin said:

Have you considered a HDHP to put away the $7k/year in the HSA?

No, access to excellent PPO plan benefits for really reasonable (for 2018) premiums is one of the few economic upsides of Calvin's government union role.  We will continue to have access to government employee plans (without the employer contribution) in retirement if he stays for 9 more years, which he plans to, so we just go the PPO route and make judicious use (as much as possible) of FSAs.

Also, yes, the health FSA limit increased from $2650 in 2018 to $2700 for 2019.  

[Susie]

Nov 28, 2018 12:07:06 GMT -5 kellygreen said:

My understanding is that it's a $5k per household limit.

for the dependent care FSA (not health), correct?

[simpsongal]

#1 is $5K limit per household. Also - if one of you is near or over the limit for social security deduction, best for the lower income spouse to take the 5K out of their paycheck (b/c the $5K lowers your income calculation for social security).  [I'm not saying this clearly....basically, I think it's an above the line deduction....? is that what I'm saying?]

I'm not sure about #2...I figured it was $2800 total but I may be wrong.

[Susie]

Nov 28, 2018 13:51:06 GMT -5 simpsongal said:

#1 is $5K limit per household. Also - if one of you is near or over the limit for social security deduction, best for the lower income spouse to take the 5K out of their paycheck (b/c the $5K lowers your income calculation for social security).  [I'm not saying this clearly....basically, I think it's an above the line deduction....? is that what I'm saying?]

I'm not sure about #2...I figured it was $2800 total but I may be wrong.

Yes, good point.  Although I am not sure if it still matters now that I am self-employed?  Either way, I will just have Calvin continue to do the full $5k for dependent care in case it still matters, rather than doing it myself.

If we can do up to $5400 combined for health savings, I need to figure out how much we really want.  Definitely >$2700, but probably <$5400.  I foresee spending $1700 on Invisalign balance and several hundred on contacts that I really need right off the bat in January, plus usual yearly stuff, and any pumping/nursing supplies I buy will also be FSA-eligible.  It's such a pain to try to predict though.  This year (mostly because Invisalign) we ran out in late summer.  I should probably have Calvin do the full $2700, and then I just do whatever balance we want for the same reasons as the DC FSA.

[kellygreen]

Nov 28, 2018 12:32:39 GMT -5 Susie said:

Nov 28, 2018 12:07:06 GMT -5 kellygreen said:

My understanding is that it's a $5k per household limit.

for the dependent care FSA (not health), correct?

Sorry - yes, I meant dependent care!

[pmwife]

Nov 28, 2018 13:51:06 GMT -5 simpsongal said:

#1 is $5K limit per household. Also - if one of you is near or over the limit for social security deduction, best for the lower income spouse to take the 5K out of their paycheck (b/c the $5K lowers your income calculation for social security).  [I'm not saying this clearly....basically, I think it's an above the line deduction....? is that what I'm saying?]

I'm not sure about #2...I figured it was $2800 total but I may be wrong.

Would this also affect the calculation for a high earner 401k cap?

[simpsongal]

Nov 28, 2018 15:47:52 GMT -5 pmwife said:

Nov 28, 2018 13:51:06 GMT -5 simpsongal said:

#1 is $5K limit per household. Also - if one of you is near or over the limit for social security deduction, best for the lower income spouse to take the 5K out of their paycheck (b/c the $5K lowers your income calculation for social security).  [I'm not saying this clearly....basically, I think it's an above the line deduction....? is that what I'm saying?]

I'm not sure about #2...I figured it was $2800 total but I may be wrong.

Would this also affect the calculation for a high earner 401k cap?

I'm not sure but I don't think 401K contribution affects salary for social security calculation purposes.... it doesn't seem to affect mine.  I admit, this is not my area of expertise.

[mccallister84]

Nov 28, 2018 14:35:23 GMT -5 Susie said:

Nov 28, 2018 13:51:06 GMT -5 simpsongal said:

#1 is $5K limit per household. Also - if one of you is near or over the limit for social security deduction, best for the lower income spouse to take the 5K out of their paycheck (b/c the $5K lowers your income calculation for social security).  [I'm not saying this clearly....basically, I think it's an above the line deduction....? is that what I'm saying?]

I'm not sure about #2...I figured it was $2800 total but I may be wrong.

Yes, good point.  Although I am not sure if it still matters now that I am self-employed?  Either way, I will just have Calvin continue to do the full $5k for dependent care in case it still matters, rather than doing it myself.

If we can do up to $5400 combined for health savings, I need to figure out how much we really want.  Definitely >$2700, but probably <$5400.  I foresee spending $1700 on Invisalign balance and several hundred on contacts that I really need right off the bat in January, plus usual yearly stuff, and any pumping/nursing supplies I buy will also be FSA-eligible.  It's such a pain to try to predict though.  This year (mostly because Invisalign) we ran out in late summer.  I should probably have Calvin do the full $2700, and then I just do whatever balance we want for the same reasons as the DC FSA.

Do you have a deductible? I would also factor in the cost of the birth, etc. And since we have a high deductible we also planned on H getting his vasectomy this year as well (I gave birth in June) since our deductible was met by the birth. Just something to consider.

[Susie]

mccallister84, no, we don't have a deductible.