How to Spend FSA Extra Money
The great thing about flexible expense accounts (FSA) is that roughly 30% of the amount you save through your company is essentially free money that you would normally lose through taxes. Trick? For most plans, you will have to spend everything before the end of the year, otherwise you will lose them forever.
Unfortunately, this is like diligently saving a couple thousand dollars over the course of a year by removing them from the ATM and then putting them in the trash can. This year, if you have an FSA, make sure you don’t leave money on the table by spending it on FSA-compliant medical expenses until December 31 ( Nerdwallet says people often leave between $ 50 and $ 100 after themselves).
You now have more options for FSA spending
Fortunately, the CARES Act has relaxed the rules on what counts as medical expenses (retroactive to early 2020). You can now use FSA funds on over-the-counter drugs and menstrual products, giving you more ways to spend funds from your FSA account (allowing you to make contributions of up to $ 2,750 in 2020).
Confirm if your FSA allows renewals or renewals
Before jumping into CVS, check with your employer to find out your FSA balance and use-or-lose account. Depending on your plan, you may have options, including renewing up to $ 500 for the next year, or an extended grace period of two and a half months to spend using your account. With these options, you might want to spend more strategically, perhaps on medical needs that you expect to pay in January. Either way, you will have a little more space to clear your account.
Once you have verified your FSA balance, you can spend every last cent on medical expenses, including deductions and co-payments for health insurance (but not insurance premiums); prescription medications; over-the-counter medicines; and other supplies such as crutches, blood test kits, and bandages.
A full list of what qualifies as FSA expenses can be found at the FSA Store or HealthProductsForYou , just in case .
If you don’t have a dire need to spend money on medical expenses, just think of a few – this is a good time of year to buy contact lenses or glasses again, get over-the-counter medications, or perhaps squeeze out a visit to the dentist while brushing your teeth. Other ideas include:
- Acupuncture treatment
- Allergy medication (over-the-counter and over-the-counter)
- Aspirin and other over-the-counter pain relievers.
- Blood pressure monitors
- Breast pumps
- Breastfeeding lessons
- Childbirth classes
- Chiropractic care
- Condoms and other contraceptives
- Contact lenses
- Cough drops and syrup
- Dental procedures
- Diabetic monitors, test kits, strips and supplies
- DNA tests from 23andme
- Drug and alcohol addiction treatment
- Eye exams
- Fertility monitors and treatments
- First aid kit
- Flu shots
- Hearing aids and batteries
- Insulin
- Laser eye surgery
- Mental health counseling
- Mileage for travel to and from a doctor’s appointment
- Night guards
- Physiotherapy
- Pregnancy tests
- Prescription drugs
- Prescription Sunglasses
- Over-the-counter reading glasses
- Smoking cessation programs
- Sunscreen (SPF 15 or higher)
- Walking aids such as canes, walkers, and crutches.
This post was originally published in 2017 and was updated on December 10, 2020 with more recent information.