The total expenses for the family are $980 + $1,840 + $220 = $3,040. The insurance plan pays 80% of out-of-hospital expenses up to $3,000, so they will pay $2,400 (80% of $3,000). The family will be responsible for the remaining $640. However, they also have a deductible of $250 per person, so the family will need to pay an additional $750 ($250 x 3) before the insurance starts covering their expenses.
With a flexible spending account (FSA), the Bauldings could set aside pre-tax dollars to pay for eligible medical expenses. This would allow them to reduce their taxable income and save money on taxes. They could use the FSA to pay for their deductible, co-pays, and other eligible expenses. The FSA could help them save money on their healthcare expenses and make it easier to budget for these expenses.
Advantages of an FSA include tax savings, lower out-of-pocket costs, and the ability to budget for healthcare expenses. Disadvantages include the use-it-or-lose-it rule, where any unused funds in the account at the end of the year are forfeited. Additionally, FSAs may require some paperwork and record-keeping to track expenses and submit claims.