Flexible Spending Accounts About to Get Less Flexible

Flexible Spending Accounts, which allow you to use pre-tax dollars to pay for dental and medical expenses that aren't covered by insurance, have long been favored by budget conscious consumers. That's because money that goes into these accounts escapes income, Social Security and Medicare taxes, reducing your overall costs for your eligible expenses by about 20%, according to estimates from consulting firm, Mercer Health and Benefits.

But these accounts, known for their extremely generous list of eligible expenses and utilized by one in three employees, are about to get a lot less flexible in 2011. With new restrictions, designed to raise additional tax revenue to offset the costs of the health care reform bill, going into effect on January 1, here's what you need to do.