Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays Bank.
If you don’t spend the balance of you Flexible Spending Account before the ball drops in Times Square, you forfeit the excess and burn up your savings. Don’t squander your FSA! Let’s go spend some money!
What is a Flexible Spending Account?
A flexible spending account, commonly referred to as an FSA, is an employer-provided benefit that allows you to set aside money for your health spending needs on a pre-tax basis. The money can go toward all manner of medical-related expenses, and can save you quite a bit of money when managed properly.
How do you manage the plan properly? Since you have to declare your contribution amounts before the start of each year, you should run your health spending through an FSA worksheet. That way you can predict the amount that you and your family will likely need during the upcoming year.
Predicting your health spending can be a bit of a crapshoot, so you’ll want to spend a good deal of time running through the numbers, and you should probably be a bit conservative.
Our FSA still has a balance!
My wife and I participate in the FSA plan currently offered by my employer – if they offered a Health Savings Account (HSA), I would elect to participate in that, but… They don’t, so I’ll spend my pre-tax dollars wherever I can get them!
We currently reserve $500/year for the two of us (just my wife and me). We’re coming up to the end of our 2nd year, and the $500 calculation has suited our needs pretty well, though we still have around $150 left to spend this year. Which brings me to the meat of my article… How to spend your FSA money before you lose it.
If you overestimated your expenses and have a balance left in your FSA, make sure you get out there and spend it before the end of the year! Unless, of course, you are content to forfeit the balance and negate your savings altogether!
Ways to spend your FSA balance before year’s end…
So which expenses are eligible and which ones aren’t?
General ways to spend:
- Acupuncture – Why not start off with something interesting? I’ve always wanted to try it!
- Doctor’s visits – Schedule a routine checkup, have a full physical performed (including blood work), or get that nagging sports injury looked at.
- Dentist – Maybe you have a case of yuck mouth… Schedule a cleaning ASAP so you can go back a second time to get any cavities filled before years end.
- Optometrist – Get that eye exam you’ve been putting off, get some new glasses, get your frames fixed, renew your stock of contact lenses, put it toward LASIK surgery, or even eye drops and contact solution.
- Fill prescriptions – If you have any prescription that need to be refilled soon, do it now.
- Immunizations – Boo… Hiss… (I’m not a big fan.)
- Dermatologist – Uhhh, maybe you have an embarrassing rash?
- Audiologist – Go get your ears tested. I said… GO GET YOUR EARS TESTED!
- Therapy – Physical therapy, learning therapy, or psychiatric therapy.
- Physical impairments – Wheelchairs, crutches, walker, custom made ortho shoes.
- Special needs – Smoking cessation programs, transportation to/from medical appointments, etc.
- Over-the-counter (OTC) drugs – Allergy meds, antacids, band-aids, cold and flu medicine, cough drops, fiber supplements, first aid supplies, incontinence supplies, hemorrhoid cream, laxatives, nasal spray, pain reliever, rubbing alcohol (great for use as deodorant), sinus medication, and wart remover are all covered.
Expenses that require a letter of medical necessity:
- Health club fees
- Visits to a chiropractor
- Natural supplements/vitamins – Yes, that’s right… You can get birth control, hemorrhoid cream, laxatives, and wart remover, but… In order to get some vitamins, you have to show medical necessity.
- Massage therapy – Now we’re talking!
- Acne medication
- Weight loss programs – Considering the high cost of our obesity epidemic, this seems like an obvious general need… But it’s not.
Examples of ineligible expenses:
- Cosmetic surgery
- Insurance premiums
- Marriage counseling
- Prepayment of services
- Special dietary foods
- Personal care items
- Teeth bleaching/whitening kits
Please note that this is a general list of what is and isn’t covered. Be sure to check the details of your individual plan before spending a ton of money. Another important consideration is when you have to file your claims. While you have to spend the money by December 31st, you should have some time after the New Year to file your claims.
If you’re looking for more spending ideas, CVS has a nice list of FSA-eligible items, as does Drugstore.com. Amazon.com is another good place to spend out your FSA without leaving home, though they don’t seem to have a list of FSA-friendly items.
- How to Become a Millionaire
- How to Get Out of Debt
- The Best Dollars I've Ever Spent
- How Our Estate Plan is Structured
- How We Paid Our Mortgage In Less than 10 Years
- Money Making Ideas
- How to Manage Your Asset Allocation with Multiple Accounts
- Consumption Smoothing - Save While the Saving's Good
- How to Save on Groceries
- How Much Life Insurance Do You Need?
- Eleven Great Books About Money
- Dave Ramsey is Bad at Math (693)
- Dish Network Customer Service SUCKS (536)
- $8,000 Homebuyer Tax Credit (429)
- Pay Off Mortgage Early or Invest? (424)
- How to Claim the First-Time Homebuyer Tax Credit (352)
- Termite Control: Sentricon vs. Termidor (329)
- How Much Should You Pay a Babysitter? (288)
- Ethanol Blended Gas = Lower Mileage? (272)
- Reduced Credit Limits? Share Your Experience (256)
- $15,000 Homebuyer Tax Credit (242)
- Buying Furniture off the Back of a Truck (237)
- Will Mac OS X Lion Kill Quicken 2007? (191)