Wednesday, May 19, 2010

Using Coupons and a Flexible Savings Account to Save on Groceries

I recently discovered a new way to save on groceries using my Flexible Savings Account in conjunction with coupons.  I've never seen this method described before.

First of all, what's a Flexible Savings Account?  An FSA is an account that many employers offer as a job benefit to help pay for medical expenses.  If your employer offers this, you can save pre-tax money into a fund that you can then use for medical expenses not covered by your insurance.  Previously expenses had to be submitted to the company running your FSA, but in recent years companies have given out debit cards that can be used for these expenses.

The typical use for these cards is to pay for co-pays for doctor's visits or to pay for prescriptions, but they can also be used at drug stores and grocery stores to pay for medical items such as over-the-counter medicine and first-aid items.  My daughter uses Goodnites underpants and these are also covered (but I do not think regular diapers are covered.)

So I discovered this new savings method when I made a quick stop at Publix to pick up Goodnites, milk, and bananas.  I had a $1.50 coupon off for the Goodnites.  I decided to try using my FSA card to pay for the Goodnites and use cash for the milk and bananas.  So here was my receipt:

What I expected to happen was that the coupon would be subtracted from the Goodnites purchase and that amount, plus tax, would be taken from my FSA account.  The Goodnites were $15.99, minus a $1.50 coupon, plus 96¢ in tax.  So I expected that $15.45 would come out of my FSA, and I'd pay full price for the milk and bananas, or $1.68 + $3.19 = $4.87.

Instead, the full price of the Goodnites ($16.95 = $15.99 + 96¢ tax) came out of my FSA, and I only paid $3.37 for the milk and bananas.

Or, in other words, instead of the $1.50 coupon going toward the Goodnites, it ended up helping pay for the milk and bananas.  Or, to look at it another way, $1.50 of pre-tax money paid for $1.50 of my groceries.  So I was able to use pre-tax money to pay for groceries in addition to medical expenses.

I tried this again at CVS.  I purchased a Breeze 2 monitor, more Goodnites, and some bandages, with coupons for each of them, as well as other non-FSA items.  I used my FSA card, and the same thing happened - the FSA was charged full price for the items, and I was able to get several items for free with the coupons.

Some caveats: I've only tried this at Publix and CVS; I don't know if all retailers will accept an FSA card for part of a sale.  Also, at CVS, once you've used a debit or credit card to pay, you can't then use cash or ECBs to pay the difference - you have to put it on another card.

To summarize - if you have medical purchases to make and have coupons for them, you can use the amount in the coupons toward a non-medical item and get them for free or at a discount.  I hope I'm clear in how I'm explaining this - please ask any questions, and I'd be glad to answer them.

UPDATE:  The rules on using Flexible Savings Accounts have changed - you can no longer use the at the point of purchase to buy over-the-counter medicine.  However, you can be reimbursed from the account after the fact if you have a prescription for that medicine.  You can still buy many medical devices and use an FSA card at the point of purchase.  Please contact your flexible savings account provider for a list of eligible items.

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Mom2fur May 19, 2010 at 12:20 PM  

I have an FSA card, too, but I never knew you could do all of your purchase on one card. I guess it allows for the 'medical' purchase then asks for the difference? I'll have to give this a try. I already use the FSA card to buy items that will generate ECBs at CVS. But I'm all for any way to keep a few bucks in my own pocket, LOL!

Unknown May 19, 2010 at 3:28 PM  

I didn't know, either, until I tried it. And yes, it will deduct the amount of your FSA-eligible items, then ask for the rest (if any). And I do the deals that generate the ECBs at CVS, too. Last week, I bought the Bayer monitor for $19.99, which the FSA paid for, used a $10 coupon, and got $15 back in ECBs.

Coupon Teacher May 21, 2010 at 3:30 PM  

With the new health care bill, over the counter purchases will not longer be eligible starting next year. Thanks for linking up!

Unknown May 21, 2010 at 10:14 PM  

No, that's not true. What will happen is that only items prescribed by a doctor will be reimbursed, regardless of whether they are over-the-counter or not. This provision does start next year. Here is the text from the health care bill that supports this:
For purposes of this section and
section 105, reimbursement for expenses incurred for a medicine
or a drug shall be treated as a reimbursement for medical expenses
only if such medicine or drug is a prescribed drug (determined
without regard to whether such drug is available without a prescription)
or is insulin.’’.
Source: (page 736)

So, next year I will get a doctor's prescription for any over-the-counter cold medicines or my daughter's Goodnites (though I hope she will be out of them!) Obviously my doctor would not give a prescription for a Bayer meter, so that would not be reimbursed.

Thanks for your input!

Coupon Teacher May 22, 2010 at 7:08 AM  

I see the distinction, but I do still think that it will be harder to do next year. I can hardly get my doctor to write a prescription for anything anymore, much less OTC meds. Unless your grocery store has a full pharmacy (and some do), you may not be able to shop there without having to submit receipts anymore. I know my account sent me some paper work of certain stores I can shop at without submitting receipts and the grocery chains were no longer included.

Teresa & Julie-Andi May 22, 2010 at 7:39 AM  

I had always thought this would be a great idea, but my husband has never been at a company that offers FSA.

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