Spending Down a Flexible Spending Account

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Spending Down Your 2014 Flexible Spending Account

The rules changed last year to soften the use-it-or-lose-it provision of medical FSAs. But employers weren’t required to make the change.


Did the law change so I don’t need to worry about spending down my flexible spending account by the end of the year?

Last year, the Treasury Department changed the rules so companies could allow employees to carry over $500 in their medical FSAs from one year to the next. But employers weren’t required to make the change. Some offer the $500 carryover, but some still offer a grace period until March 15 to use the money instead (they can’t offer both the carryover and the grace period). And some employers offer neither option, requiring you to use the money by year-end. A survey by Visa and WageWorks, which administers FSAs for employers, found that 53% of employers planned to offer the carryover in 2014. Ask your employer about its rules.

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See Also: 50 Ways to Cut Your Health Care Costs

Even if your employer offers the $500 carryover, you may need to do some last-minute spending if your account balance is above that level. Now is the perfect time to schedule some year-end appointments to use up more of the money, such as for dental and vision care that isn’t covered by your health insurance.


You can use the health-care FSA money for your deductible, co-payments and medical and prescription-drug expenses that weren’t covered by insurance, as well as for eyeglasses, prescription sunglasses, contact lenses and lens solution, prenatal vitamins, breast pumps, hot and cold packs, knee and ankle braces, thermometers, blood-pressure monitors, vaporizers, heating pads, pregnancy test kits, bandages, first-aid kits and even some sunscreens, says Jeremy Miller, president of FSAStore.com, which sells FSA-eligible items. See 7 Smart Uses For Your Flex-Account Money for more FSA spending ideas.

If you have a dependent-care FSA, you still have to use all the money in that account by December 31. You can use it for the cost of day care, a nanny or a babysitter while you work, before-school or after-school care, and even day camp for the summer or school breaks-- as long as your child is under 13. For more information about those rules, see Reimbursing Yourself from a Flexible Spending Account.

Got a question? Ask Kim at askkim@kiplinger.com.