Last-Minute Ways to Spend Down Your Flexible Spending Account
Many firms that used to give employees until March to spend FSA funds now allow only $500 to be carried over to the New Year.
Question: My employer used to give us until March 15 to use the money in our flexible spending accounts, but my human resources department tells me that the rules changed, and now I can only roll over $500 to 2017. What can I do to spend the money before the end of the year?
Answer: Many companies are changing their flexible spending account rules to let employees roll over $500 from one year to the next rather than giving them a 45-day grace period to use the money they contributed in the previous year. Jody Dietel, chief compliance officer for WageWorks, which administers FSAs, says that about half the employers her company works with have switched to the $500 carryover, and most of the rest are planning to switch to the carryover in the next few years.
Now that your employer offers the $500 carryover, you’ll have to use up the rest of the money in your account by December 31 (employers can’t offer both the carryover and the grace period). You should have received a notice of the change, but it’s a good idea to ask your employer now about the rules, while you still have a few weeks to spend the money.
You can use the FSA funds for out-of-pocket medical expenses, including your deductible and co-payments, as well as uncovered expenses, such as dental and vision expenses. Before you rush to schedule new appointments, find out whether you have already incurred eligible expenses that you haven’t paid for with money from your FSA. Dietel recommends asking your health insurer about any out-of-pocket expenses that you, your spouse or any other eligible dependents had in 2016, such as your deductibles, co-payments and costs that weren’t covered by the plan. Also check with any other providers, such as chiropractors, that you may pay for out of your pocket. “Typically, folks find they have out-of-pocket expenses that they have not claimed,” she says. See WageWorks’ list of eligible expenses.
One frequently overlooked eligible expense, says Dietel, is the 19 cents per mile you can claim for travel to and from a health care provider or to pick up prescriptions (the cost of parking while visiting a health care provider is eligible, too). Keep a record of the date and type of visit and your starting and ending mileage. Having a printout of the route and mileage from an online mapping service can help; ask your FSA administrator for its documentation requirements.
You can also use your FSA money for out-of-pocket dental and vision expenses, including what you pay for office visits and the cost of glasses, contact lenses, prescription sunglasses and contact lens solution. You can also use the FSA money for prescription drug costs, as well as for some over-the-counter medications, such as allergy or pain medication, if you have a doctor’s prescription (you may need to submit a detailed receipt to your FSA provider). Some other expenses—such as the cost of a weight-loss program or nutritional supplements used for treatment of a medical condition—may be eligible if you provide a letter of medical necessity signed by your doctor, plus a detailed receipt.
And some over-the-counter products are eligible for FSA money without a prescription, such as sunscreen with an SPF of 15 or higher, adhesive bandages, a breast pump, reading glasses, first-aid kits, a blood-pressure monitor, prenatal vitamins and a portable baby monitor. See FSAStore.com’s list of eligible items (both those that do and those that do not require a doctor’s prescription). FSAStore.com specifically sells items that are FSA eligible, and you can use most plans’ FSA cards to purchase items directly with money from your account. The site also offers product “bundles” of FSA-eligible expenditures, such as items related to baby care, travel or pain relief, which can be another good way to use up money in your account before the end of the year.