We’re nearing the end of the year, and that means time is running out to put your Flexible Spending Account (FSA) account to use. Otherwise, you could lose whatever’s left over in the account.
That’s because FSA money operates on a “use-it-or-lose-it” scenario. You shouldn’t have to worry too much, since the expenses you could use your Flexible Spending Account on are plentiful.
What Is a Flexible Spending Account (FSA)?
Flexible Spending Accounts are limited to $2,650 per year per employer. For those who are married, spouses can contribute with their employer up to $2,650 in an FSA.
An FSA is a health savings account that lets you store pre-tax dollars so you can pay for certain out-of-pocket healthcare products and services. An FSA is often set up through your employers’ benefit plan, if they offer one. Since you don’t pay taxes on the money you store in this account, it’s a good way to save on taxes for an amount you wouldn't have otherwise contributed. Employers will often make regular contributions to an FSA account. Ask a tax advisor about potential savings you could take advantage of with an FSA.
Although the money in an FSA usually has to be spent by the end of the year, many employees offer a grace period or a rollover amount. For instance, some employers will allow you a two-and-a-half month grace period after December 31st to use up the rest of your funds. Or, they might allow you to roll over up to $500 from the previous year to pay for expenses the following year. Your employer might offer either a grace period or a rollover amount, but not both. It’s also not required for them to offer either option at all.
Still, it’s important to plan how you’ll use your FSA dollars accordingly. This way, you’re not losing out on the maximum benefits of an FSA.
How to Use an FSA
To use your FSA, you can submit a claim to the FSA through your employer. You may have to provide proof of the medical expense. You may also have to provide a statement that shows that the expense is not covered by your insurance plan. After submitting your claim, you’ll receive a reimbursement. Talk to your employer about how to use your specific FSA.
What to Use Your Flexible Spending Account Funds on
FSA money can be used for a variety of medical expenses that aren’t typically covered by your health plan. These expenses could include:
- Deductible and copayments
- Prescription medications, over-the-counter (OTC) medications and insulin
- Diabetic supplies, such as blood sugar test kits
- Annual eye exams, prescription eyeglasses or sunglasses, contact lenses, eye drops and saline solution for contact lenses
- Dental visits and dental treatments, such as dental exams, fillings and root canals
- Complementary medical procedures, such as chiropractor and acupuncture sessions
- Smoking cessation products, like nicotine patches
- Vaccines and immunizations
- Feminine hygiene products, birth control pills and condoms
- Breast pumps
- Weight loss programs (to treat a condition diagnosed by a physician)
- Medical supplies, such as thermometers, bandages and crutches
A list of acceptable expenses can be found on the IRS Medical and Dental Expenses page.
Even with an FSA, you could take advantage of savings offers, especially on your prescription medications. With a discount card like one from Inside Rx, you may be able to save up to 80% on your prescription medications. Simply search for your medication at InsideRx.com and compare prices at pharmacies near you. When you’re ready, download your savings card instantly and bring to the pharmacy with you to see if you can save! Saving on your prescriptions, even when using an FSA, allows you to use the remainder of your account on other items as mentioned above. Get the most bang for your buck!
Check with your employer on the specifics of the FSA and health plan available to you to see what eligible purchases may be covered.