End of Year Tips for Managing Your FSA

A flexible spending account allows you to save money for medical expenses in a tax advantaged account. If you save money for your medical expenses in a standard savings account, there is no tax advantage but when you fund an FSA, the contributions into that account are tax free which means if you put $2,000 into an FSA, the IRA will not come calling for a portion of that money, it is tax free.

The major downside to an FSA is the fact that you are required to decide how much money to put in a year ahead of time and if you don’t use up the money you have put into an FSA by the end of your plan year, you may have to forfeit the remaining money. 

There are FSAs that have some flexibility in regard to when you forfeit the remaining money. Some allow you to carry the money a couple of months into the new year while others may allow you to rollover a balance into the new year but only up to a specific amount. If you have an FSA that requires you to spend all the money by the years end, the clock is ticking.

Let’s have a quick look at a few different ways to spend down your remaining FSA balance:

Crank out medical appointments

If possible, push up any medical appointments you have in the new year. If you can change your appointment to December, you should be able to use FSA funds to cover your co-pays or any other expenses that come out of your appointment. Any sugeries or other medical procedures that you have put off that can be completed by the end of the year are another excellent way to spend down your FSA money. 

 Renew prescriptions

While insurance companies often make you wait to renew your prescriptions for a certain amount of time, they may allow you to renew some before the end of the year. It is best to check with your insurance company to see if it is possible to refill your prescriptions before the end of the year so you can use your remaining FSA money to cover the cost. 

Extra pair of eyeglasses

This one only works for people who wear glasses or contact lenses. It never hurts to have a spare pair of glasses or extra contacts in the medicine cabinet. You can use FSA money to pay for prescription eyewear, including sunglasses so if you find yourself with extra money in your FSA at the end of the year, splurge on a new pair of glasses, sunglasses, or extra contacts. 

Over-the-counter medicines

While FSAs are mainly used for prescription medication, it is not a requirement. FSA accounts also allow you to purchase a wide selection of over-the-counter medications as well as medical supplies such as bandages and ointment, even sunscreen is eligible. 

Regardless of how you spend your FSA money, the best advice is to make sure you spend down all or as much of it as you can by the end of the year to avoid losing it.