You weren't wrong in assuming that I already had accounts
in Money. I just didn't understand the use of the third
account.

Thanks for your help


- quote -

Well, I guess I don't know what accounts you already have modeled in Money.

I was assuming you were already tracking finances in Money. This led to
assumption that you were already tracking paychecks going into, typically, a
checking account named, say, Checking.

In this case, you add one account to Money, a Cash Account, name something
similar to "Flex Spending". Then you modify the paychecks you are already
tracking by adding a Transfer:Flex Spending to the before tax deductions
tab.

If you write a check for, say, child care expenses, you'd enter a Money
transaction in the Checking account with category, say, Child Care:Flex
Eligible or something similar. Then you submit the expense to the account
processor. They send you a check. You deposit the check in your checking
account. You enter a Money transaction in Flex Spending that is
Transfer:Checking.

The problem with this simple approach is it ignores the problem of tracking
your pending reimbursements. Solutions to this problem follow.

The third account I mentioned was just an account to track the
expenses/reimbursement in one account. In this case, in addition to the Flex
Spending Cash Account and the Paycheck Transfer to put the money in it,
you'd add a Money Asset account "Flex Reimbursement Pending" or similar. (I
think I said Liability in the previous posting. The more I think about it,
that was stupid advice.)

If you write a check for, say, child care expenses, you'd enter a Money
transaction in the Checking account with category, say, Child Care:Flex
Eligible or something similar. Then you submit the expense to the account
processor. Then you add a credit to the Flex Reimbursement Pending Account
categorized something like Other Income:Insurance Reimbursement Pending.
They send you a check. You deposit the check in your checking account. You
enter a Money transaction in Flex Spending that is Transfer:Checking. Then
you also enter a deduction in the Flex Reimbursement Pending Account
categorized like Insurance:Flex Reimbursement in the same amount as the
reimbursement you just deposited.

Another similar scenario is to just create the expense transactions (say
when you pay the child care expense from checking) as transfers to the Asset
Account, not an expense.

There are lots of other ways this whole thing could be done including just
ignoring the whole reimbursement account and treating it just like
insurance--which in a sense it is since it has cost that is de-coupled from
reimbursement. With this approach, in your paycheck, you'd expense the flex
amount as Insurance:Flex or similar and then call the reimbursements Other
Income:Flex Reimbursement or similar.

There's no one right answer.

"Bob" <anonymous[at]discussions.microsoft.com> wrote in message
news:3f7c01c42ad7$10167920$a001280a[at]phx.gbl...
- quote -

Please be more specific on how accounts would work. After
reading your response it sounds like I need three accounts.

Checking for paycheck
Cash for FSA
Account for dispursement of spending account Aetna i.e.

Do I undestand you correctly?

Thanks

- quote -

The basic drill is to create a cash account and then transfer the portion of
your paycheck funding it from the paycheck to the account. When you get a
disbursement, do this as a transfer from the flex account to the account you
deposit their check in. The balance of the flex account should hit $0 at
then end of the plan year. I.e., you've draw everything you've contributed.

The tougher problem is how to keep track of expenses that qualify. There
aren't any really good ways here, since these expenses typically need to be
recorded in existing accounts like your checking. Some people use
classification or categorization so that they can identify what should be
reimbursed. Others enter the transactions both in the account that spent the
money and in a "pretend" liability account. Then they do the same with the
disbursements. This would have implications on reporting, however, since you
get the money twice. In my case, I keep track of the flex accounts in Excel
and just manage the cash in Money.

"Bob" <anonymous[at]discussions.microsoft.com> wrote in message
news:3c3a01c42a7a$0d7c6790$a601280a[at]phx.gbl...
- quote -

How do you set up a Flexible spending account?

Thanks