Don’t Lose Out On Your Flexible Spending Account
Many employers, about 90%, offer Flexible Spending Accounts as a way for employees to save tax free dollars to use for medical expenses. There are requirements though to using those funds and one is that if you don’t use it by the deadline you lose it!
Here is a look at how flexible spending accounts work and important things to know if you have one so that you get the most benefit from it!
December is a hectic time, but there’s one tax task you can’t overlook in the holiday rush. If you have a medical flexible spending account, or FSA, you need to check its balance — and check with your benefits department — to make sure you don’t end up wasting that money.
These workplace-provided accounts are popular for a couple of reasons.
First, you can use the account money to pay for items and services that aren’t covered by your health insurance.
Second, the saving process also saves you tax dollars. You make FSA contributions via regular, equal payroll deductions. The amounts are taken from your paycheck before your withholding taxes are calculated, so you owe a bit less in federal income and Social Security taxes upfront.
But the accounts have one drawback: In many instances, if you don’t use the money by the end of your benefits year, which for most people is Dec. 31, you’ll lose it.
Check your deadline
In some cases, however, the year-end deadline isn’t firm. The IRS allows employers to give FSA owners until March 15 of the following year to make eligible medical expenditures and pay for them with account money. But the grace period is optional. Companies can offer it or not.
So your first step is to check with your benefits office to confirm your spending deadline, says Bart Turney, a vice president with ADP Strategic Advisory Services in Louisville, Kentucky.
If your workplace gives you until mid-March to incur FSA-eligible expenses and use this year’s funds to pay for them, you have some breathing room.
Companies now also have the option of allowing employees to roll up to $500 in unspent FSA funds into the next benefit year.
However, both those choices are optional and at the employer’s discretion. If your spending deadline is the end of December, start making doctor appointments and buying allowable medical items now. – Bankrate
Overlooked Ways To Spend Your FSA Cash
So if you need to spend your FSA money and want to be sure you know the possibilities, here is a list of how you can use your flexible spending account.
A lot of people spend down their FSA money by making last-minute appointments to see a dentist or eye doctor. But those aren’t the only things you can use your FSA for; many medical and health-related expenses are eligible. Here’s a list of things you can get with FSA dollars …
Blood pressure monitors
Cholesterol test kits
Copays, coinsurance payments and deductibles for dental, medical, vision and prescription coverage
Condoms and other contraceptives
Diabetic monitors, test kits, strips and supplies
Eye surgery, including laser eye surgery and Lasik
First aid kits
Hearing aids and batteries
Medical records charges
Mileage for travel to and from health care appointments
Monitors and test kits
Over-the-counter reading glasses
Smoking cessation programs
Walking aids like canes, walkers and crutches
There are additional goods and services, including some over-the-counter treatments, that can be expensed with a prescription or letter from a doctor. – Time – Money
Does your employer offer you the option of a flexible spending account?