Year-End FSA Planning – Use it, or Potentially Lose it

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    Ashlee Walton, CFP®
    Financial Planner

    If you have a healthcare Flexible Spending Account (FSA) through your employer, you probably know you have until the end of the year to use the funds before some or all of the balance is lost. The general rule is that any unused money in the account is forfeited to the employer at the end of the year. Employers have multiple options for what to do with these forfeited dollars, but rarely are they returned to the employee. Because of this, it is important to ask your Human Resource department what, if any, grace period they have, and then use the dollars before the deadline.

    Most FSA owners already know they can use these funds for expenses such as physician and hospital copays, coinsurance and other costs, as well as prescription medication and lab fees. But if the deadline to use the funds is approaching and you don’t anticipate any of these expenses, there are other ways you can spend the funds to avoid simply losing them. Often, FSA owners are not familiar with the less common eligible uses. Commonly used qualified items that can be purchased without a prescription should be considered, especially if they have a relatively long shelf life and you are likely to use them in the future. Athletic braces or supports, bandages, crutches, canes, walkers, or related items may be something to stock up on if you have a medical use for them. If your doctor will write you a prescription, you can purchase over-the-counter medicines such as aspirin and other pain relievers, allergy and sinus medication, antacids, antibiotic ointment, canker and cold sore treatments, cold and flu medication or prevention, dietary supplements, eye drops, laxatives, motion sickness medication, nasal sprays/strips, and sleep aids. Additionally, your FSA funds can be used for most dental expenses, including preventative care, and eye care such as examinations, contact lenses, glasses (including prescription sunglasses), and laser eye surgery. Chiropractic care and acupuncture are also qualified expenses. Some other eligible items include condoms, contact solution, first aid kits, thermometers, incontinence supplies, occlusal guards to prevent teeth grinding, pregnancy tests, readers, and certain sunscreens and sunburn creams. Amazon recently added a tool to their online shopping app that allows you to filter search results by FSA/HSA eligibility, so many of these items are available online, making it even easier to use your FSA funds before the deadline. Of course, you should always confirm items are qualified before purchasing.

    Different FSA providers have different rules, so it is important to make sure you understand the requirements specific to your plan and use the funds for qualified expenses before the deadline to avoid potentially losing them. You should keep your receipts and be sure to obtain a note or prescription from your doctor when needed. Please contact us with any questions you may have.