Don’t Waste Money: How to Spend Your FSA Money Before It’s Gone
Waste not, want not. The popular saying is relevant for many things, including your Flexible Spending Account, or FSA. The money you and your employer put aside each year for your out-of-pocket medical costs can be a huge help in the face of high doctor copays and other expensive health care necessities throughout the year. But what happens if you don’t spend it all?
FSAs are contributions made before paying taxes, so you can save without giving Uncle Sam a cut of that medical-directed money. Since the 2016 contribution limit was $2,550, it’s possible you haven’t used up all of your funds if your medical costs were low this year. You and your employer are allowed to contribute up to $2,600 in 2017, so you’ll have another opportunity to save. However, it would be a wasted opportunity to give up those hard-earned dollars so easily.
Unlike HSAs, which are similar savings programs but with different regulations, the money in your FSA account doesn’t all roll over from year to year. In other words, use it or lose it. As TIME explains, your employer is allowed to keep the forfeited FSA money to help cover the costs of running the program in the first place.
While it’s nice that your employer allows you to have such an account in the first place, that doesn’t mean you need to show your gratitude by giving the unused money back at the end of the year. While FSA accounts are often used to pay for prescriptions, co-pays, and doctor’s fees that insurance won’t cover, the term “flexible” is accurate. If you have leftover money, you can spend it on a wide variety of medical-related items.
“What most people don’t understand is that the list of eligible expenses is pretty robust,” Steve Auerbach, CEO at Alegeus, a benefits management company, told NerdWallet. “What most people view as routine expenses can actually be FSA-applicable.”
What to know about your FSA funds
First, it’s important to check what type of FSA you have through your employer. Some plans do allow exceptions for spending all of your money before the end of the year. One exception is a type of carryover plan, which allows employees to roll over up to $500 of unused funds to the next year. Another type allows employees a grace period to use all of their money. Employees with this type of plan have until March 15, 2017 to use any contributions from the 2016 year, for example.
The IRS allows employers to extend one of those perks, but not both. And if you have more than $500 left or don’t spend it before mid-March, those extra funds still go back to your employer.
It’s important to note here that a solid budget, and keeping track of your medical spending from years prior, can be helpful in making sure you don’t contribute too much to your FSA plan. If you’re consistently scrambling to spend the rest of that money year after year, consider decreasing your contributions. You won’t get the tax perks anymore — that money will once again be subject to income and local taxes — but at least you’ll be able to use it for other purposes.
However, that doesn’t solve the problem at hand. Here are four suggestions for ways you can spend leftover FSA money.
1. Additional doctor visits
If you’ve been avoiding your yearly checkup or your vision exam, there’s never been a better time to call your doctor and make an appointment. Even if you don’t have the greatest insurance, you can use your FSA dollars to cover the rest. Those funds will cover co-pays, but also cover medical procedures. Your FSA won’t have enough money to fund extensive procedures, but could at least get you a renewed eyeglasses prescription — and maybe even a new pair of frames. Dental visits are also included.
2. Alternative medical services
Have you always wanted to try acupuncture? Does your friend swear by your local chiropractor? While you might not immediately try one of these medical services, they are FSA-eligible. If your insurance company won’t pick up the tab but you’ve got extra funds, use them to try a medical treatment you’ve been curious about.
As NerdWallet reports, acupuncturists and chiropractors are just a few of the services you might not realize are covered by FSA money. Mental health and drug abuse counseling are also covered, and so are the costs for any service animal you have — including their food and grooming. If you traveled to receive medical treatment this year, those costs are also subject to an FSA claim.
3. Health products with a prescription
The next two categories cover a much larger spectrum of products. Almost anything you can find in the health care aisles of your supermarket or drug store can be covered with FSA funds, though the rules are different depending on the product. Though Amazon doesn’t permit you to use your FSA card, many stores like Walgreens, Walmart, and CVS allow you to make in-store or online purchases with the card. (If you don’t have a card, you can claim the reimbursement manually.) If you prefer to shop online, reputable sites like FSAStore.com allow you to make purchases with your card, and only feature items that are FSA-eligible in the first place.
Due to health care reforms in recent years, some items now require a doctor’s prescription to purchase them with FSA money, even if they’re over-the-counter products. Here is a brief summary of the items that will require a prescription in order to use your FSA card.
Most over-the-counter medicines: If you’re hoping to use your FSA card to stock up on allergy medications, or fill your medicine cabinet for cold and flu remedies for the next year, call your doctor for a quick appointment first. Additional medicines that require a prescription for FSA eligibility are sleep aids, digestive aids, and painkillers.
Topical creams and treatments: Picking up a topical cream for your baby’s rash or your husband’s athlete’s foot is easy enough, but it’s covered by FSA funds if you get a doctor’s prescription for it. The same goes for corn or wart removers, along with most other ointments.
Miscellaneous items: Despite not needing a prescription for normal purchasing, there’s a number of other items that require a doctor’s note if you want to use your FSA card. Those include acne treatments, ear and eye drops, and nicotine gum or patches.
For a full rundown of FSA-eligible items that require a prescription, check out the list at FSAStore.com.
4. Health products without a prescription
You likely have enough on your plate during this busy season, and going to the doctor for a prescription to use your FSA dollars just isn’t worth the hassle. However, there are plenty of other health-related items you can stock up on instead. Here are a few to note.
First aid supplies: If you’ve never bought that extra first aid kit for your car trunk or travel bag, now is absolutely the time to do it. Full kits are FSA-eligible without a prescription, as are most of the items you put in it. Bandages, braces, and wraps are all included, as are lip balm, thermometers, and hot and cold packs.
Some medications: Though you need a prescription to purchase most FSA-eligible meds, there are a few that you can get on your own. Those include prenatal vitamins, motion sickness aids, nasal sprays, and glucosamine supplements (which help with joint stiffness.)
Medical equipment: If you’re paying for medical equipment in your home, make sure you use up your FSA balance on it first. Wheelchairs and walking aids are eligible, as well as heating or cooling pads and blood pressure monitors.
Other miscellaneous items: If you’re not sure if a health-related item is FSA-eligible, check the comprehensive list at FSAStore.com. In most cases, it will be. Sunscreen, condoms, and reading glasses can all be paid for using FSA money. In addition, hearing aid batteries, contact lens solution, and diabetes-related care items are included.