Top Ways To Use Your Flexible Spending Account Before The End Of The Year

Top ways to use your flexible spending account before the end of the year

So, you’ve been using the money in your flexible spending account, or FSA, to pay for health-related expenses like copays, prescriptions, and dental care, all while reducing your taxable income. Flexible spending accounts are a smart employee benefit because the amount you save in the account over the year is not subject to federal taxes. 

 

But now the end of the year is approaching, and there are still funds in your account. Generally, all the money set aside in an FSA has to be used by the end of the year, or you’ll lose it. Some plans offer a grace period, but it’s a good idea to start thinking about ways to use those funds. You don’t want to give your money away. Research shows that a third of employees who have an FSA lose an average of $120 annually.

 

While you can’t spend the remaining money on holiday gifts, there are plenty of options to use the funds, ranging from personal health care items to home care needs. 

 

The best way to maximize your FSA is to know the rules. And the best way to start is by asking your plan administrator some key questions, including:
 

  • Can the funds be carried over? According to the IRS, an employer can offer employees an option to carry over up to $500 of unused funds to the following plan year.

 

  • Is there a grace period to use the funds? Some plans allow employees two and a half months after the end of the year to incur eligible expenses. For example, if the plan year ends on December 31, the grace period would extend to March 15.
     

  • How long after the plan year ends can a claim for reimbursement be filed? Most plans allow up to 90 days after the plan year ends to submit receipts for expenses incurred the previous year. For instance, if the plan's deadline is December 31, you'll have until March 31 to file a claim. 

 

So how can you spend your FSA funds before the end of the year? Here are some ideas:

  • Online medical services (classes, online appointments and more)

  • Order medical supplies  (bandages, thermometer, glucose sticks, etc.)

  • Eye exam, supplies, elective procedures

  • Dental exams, routine or elective care

  • Elective care for well-being  (may include nutrition or health coaching)

  • Health screenings (blood pressure, cholesterol, etc.)

  • Smoking cessation programs (Check with your healthcare provider for classes)

  • Cancer screenings

  • Diagnostic services (x-rays, ultrasound, MRI’s, etc)

  • Flu shot (available at most drugstores or your healthcare provider)

  • Immunizations (for other diseases such as TDAP)

  • Other exams -  specialty exams.

 

Before you start spending, though, you should also find out what doesn’t qualify. For instance, some elective healthcare services, such as weight loss programs not prescribed by a physician, are not allowed. For a full list of eligible health-related expenses, check irs.gov. Or contact your employer for more information.