Health Care
Saving Grace Period for Flex Accounts
Make the most of any money remaining in your 2009 FSA.
By Kimberly Lankford, Contributing Editor
From Kiplinger's Personal Finance magazine, March 2010
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If your employer is among the growing number of companies that offer a grace period of two and a half months to use up flexible spending account dollars, you have until March 15 to spend any money left in your 2009 account -- or forfeit the balance. To sop up leftover funds, most people go on a last-minute spending spree, filling prescriptions for drugs, eyeglasses and contact lenses; stocking up on economy-size bottles of pain relievers and over-the-counter cold and allergy medications; or getting their teeth cleaned.
But if you think big, you may have an opportunity to tap an extra-large pot of money before the deadline. Between January 1 and March 15, you can combine leftover 2009 money with the full amount earmarked for your FSA in 2010.
Say you plan to contribute $3,000 to your FSA in 2010 and you still have $1,000 left over from 2009. That gives you $4,000 tax-free to spend now on big-ticket items, such as laser eye surgery or dental work, even though you may have contributed only a few hundred dollars so far this year.
Don’t have significant bills in your immediate future? You can spend FSA funds on almost any medical expenses that aren’t reimbursed by your health insurance, whether they be co-payments and deductibles, a weight-loss program prescribed by your doctor, or a smoking-cessation program. And in most cases, you can use the money for your dependents’ medical expenses as well as your own, even if they aren’t covered under your health-insurance policy. Most employers give you a few extra weeks after the March 15 deadline to submit expenses for reimbursement.
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Reader Comments (1)
Posted by: Hylas at 03/16/2010 05:53:08 AM
The "Use it or Lose it Rule" totally undermines a responsible approach towards health care costs. At a time when the country is struggling with controlling health care costs and inefficiencies, this rule provides a strong incentive for engaging in a year-end spending spree on unnecessary health care items, to avoid losing any unspent balance. This is inexcusable and downright shameful in the context of our debilitated economy and soaring health care costs. Would it really hurt to allow balances to be carried over into a succeeding year? the balance could count against the maximum allowable contribution in the succeeding year.