Flexible Spending Accounts

[Robin Chattopadhyay]

Hi-

I have a Flexible Spending Account (FSA) that can be used for medical
expenses using pre-tax dollars. I track the available balance of the FSA in
Gnucash, but I'm not really thrilled with the way I've chosen to account for
it.

On January 1, the witholding amount I selected during the open enrollment
process is credited to my account at the FSA provider. The entire amount is
credited, even though the withholding is divided by the number of pay
periods in the year; so, conceivably, I could spend the entire amount on
Jan. 1 and have nothing in the account for the rest of the year.

My problem is how to account for this. Currently, I have an asset account
called Health FSA that was credited with $260 on 1/1/09 and an offset debit
to my Opening Balance Equity account. Any healthcare related expenses that I
use the FSA dollars for are debited from this account and an offsetting
credit is made to the corresponding Expense account. So far, so good (I
think).

My problem is the $10 per pay period that is withheld from my paycheck for
the FSA contribution. Right now, I credit the Opening Balance Equity and
debit the appropriate Income account.

At the end of the year, the $260 debit to the Equity Opening Balance account
is offset by the twenty-six $10 credits.

As I said, I'm not thrilled with my choice to use the Equity Opening Balance
account for this because it looks odd to me to have the balance of the
Opening Balance account change throughout the reporting period.

Any suggestions for a "better" way to do this? Perhaps a separate "Deferred
Income" liability account?

Thanks!
Robin