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Help! It's almost the end of the year, and I still have about $1,000 left in my health-care flexible-spending account. I totally misjudged my medical expenses for the year. What can I do? I don't want to lose the money.
You may not need to worry. In May, the U.S. Treasury Department issued a notice allowing employers to extend the flexible-spending account deadline for up to 10 weeks. Only about half of the employers surveyed by the Deloitte Center for Health Solutions opted to change their plans this year. But if your company was one of them, then you may have until mid-March to use the money in your account.
But even if your employer didn't change its plan, there are a few things you can do to spend the money quickly. You can use the health-care flexible-spending account money to pay for health insurance deductibles, co-payments, dental work, orthodontia, out-of-pocket expenses for fertility treatments and other medical expenses that aren't covered by insurance. However, that might be tough to do quickly in the last two weeks of the year.
But there are a few last-minute things you can do to use the money. You can spend the FSA money on prescription and certain non-prescription drugs. So a trip to the drugstore to stock up on aspirin and cold medicine could use up a chunk of your cash (you can't use the money, however, on vitamins). If you take prescription medications, see if you can order the next few months' supply in advance.
It also probably isn't too late to get eyeglasses, contact lenses and prescription sunglasses, which are reimbursable expenses. Doctor-recommended weight-loss programs and a trip to the chiropractor can count, too. And if you can get a last-minute appointment with the dentist, that also can help you clean out your account. For more ideas, see 25 Ways to Spend Your Flex Account
And even if you don't use all the money in your account, you still can come out ahead because of the tax breaks. Because the money you set aside in the account lowers your taxable income, if you put $3,000 in your flex account and you usually pay about 33% of your income in federal, state and social security taxes, for example, you only have to spend about $2,000 to break even.
Our flex-plan calculator can help you find your break-even point and figure out how much money to set aside in the account for next year.
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