Having a flex spending account (FSA) as part of your employer-sponsored health insurance can be both a blessing and a curse. It’s a blessing because any contributions you make to the account are pre-tax, meaning the amount of your taxable income drops when you add to your flex spending. It’s a curse because the money in your account has a lot in common with Cinderella’s gown: After December 31, it vanishes and for the most part, you can’t get it back. While some employers might give you a two and a half month extension, meaning you have until March 15 of the next year to use your FSA and others let you roll over up to $500 each year, not every company does. Take advantage of that tax advantaged money and use it before the year’s end.
Co-Pays and Deductibles
One way to use your flex spending in money is on co-pays at your doctor’s office and to pay down your deductible. If you have a considerable amount left in your FSA as the end of the year approaches (the limit is $2,550, according to Healthcare.gov), one ideal way to spend it down is to make those medical appointments you’ve been putting off. Schedule a visit to your dermatologist for your annual skin check, for example, or book an appointment with an optometrist to make sure your glasses prescription is up-to-date.
Prescriptions and Equipment
A few years ago, you could use your FSA money to purchase over-the-counter medicines, without a prescription. These days, you can still use the money in a flex spending account to buy over-other-counter products, but you also need a prescription from your doctor to do it. If you buy a bottle of ibuprofen at the drugstore without a prescription, you’ll need to pay out-of-pocket, with after-tax money.
Your FSA money can also go towards any regular prescription medication you need to take, as well as any equipment you need, such as crutches for a broken leg, splints and bandages for sprains, and a blood pressure monitoring machine. You can also use your FSA funds to buy a backup pair of glasses or a pair of prescription sunglasses.
The money in your FSA account can come in handy if you don’t have dental insurance or if your dental plan doesn’t cover much. You can use the money to pay for a regular cleaning and exam, dental X-rays, and any necessary dental treatment. If you find yourself with flexible spending money to burn as the year draws to a close, you might want to finally spring for braces for yourself or your child.
What You Can’t Pay For
Your health insurance most likely doesn’t cover cosmetic treatments, such as plastic surgery or Botox injections, and you can’t use FSA money to pay for those procedures, either. You also can’t use money in an FSA to pay for cosmetic dentistry, such as teeth whitening.
If you’re struggling to spend the money in your FSA, it might be a good idea to adjust the amount you contribute next year. At the beginning of the year, your employer will give you the option to change your contribution. Otherwise, you risk throwing money out of the window, if you’re unable to use up your account before the deadline or are unable to roll any part of it over.
The team at CESI is committed to helping you make wise financial decisions and to helping you understand how to get out, and stay out of debt. For a free debt analysis, contact us and find out how we can help.
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