Don’t Risk Losing Your FSA Funds This Year
If you have a Flexible Spending Account (FSA), the time required to use your remaining balance expires. During the pandemic, you may have taken advantage of relief rules that allowed you to roll over FSA funds past the typical end-of-year deadline. This year the transfer rule is abolished. Here’s what you need to know about using your FSA health balance so you don’t lose that money.
How the FSA usually works for health
Health FSAs are employer-sponsored expense accounts where you can deposit pre-tax dollars and then use that money for eligible health care expenses. The contribution limit for 2022 is $2,850, and the IRS has yet to announce a limit for 2023.
While this may all sound like a health savings account (HSA), one of the main differences between the two is that FSA funds expire at the end of the year. It’s a “use it or lose it” account.
Pandemic rules are rolled back
The Care Act of 2020 established temporary rules that allowed you to roll over unspent FSA funds beyond the standard year-end deadline (provided your employer accepted this rule change). Now, these pandemic rules will cease to apply on December 31 this year. Even if your company allows you to roll over some current FSA funds for 2023, you are limited to $570.
Since you may have had the opportunity to roll over funds from previous years, your current balance may be higher than ever.
How to spend FSA funds before the expiration date
If you’re not likely to spend the rest of the year on doctor visits – either because everything is booked months in advance or because that just sounds terrible – fear not. You may use the remaining FSA funds for other eligible healthcare expenses.
You can use FSA funds to upgrade your prescription glasses or buy more contact lenses. You can also visit your local pharmacy and stock up on some FSA-compliant OTC products, such as first aid products, popular cold medicines, and even sunscreen. A complete list can be found at the FSA shop here .
However you choose to spend your FSA funds, don’t let that money go to waste. After all, it came out of your paycheck. Refer to your employer’s policy for any balance as of December 31 of this year so you don’t lose your hard-earned funds.