Flexible Spending Funds: Use It or Lose It

If you have a Flexible Spending Account (FSA), the end of the year brings an important deadline: using up your FSA funds before they expire. FSAs offer a great way to save on medical and dependent care expenses by using pre-tax dollars, but there's a catch - if you don't use the money by a certain deadline, it typically expires. While some FSAs offer a grace period or allow you to roll over a portion of the funds, many operate under the "use it or lose it" rule.

Leftover FSA funds are your hard-earned dollars - so don't let them slip away! So let's explore how to maximize your FSA funds, what expenses are eligible, and strategies to avoid leaving money on the table as the year comes to a close.

Understanding FSA Deadlines

Before diving into how to use your FSA funds, it's important to understand the specific deadlines that apply to your account. Depending on your employer's plan, there may be different rules regarding when you need to spend your FSA balance.

For many FSA holders, the end of the calendar year marks the deadline for spending your funds. If your employer uses this structure, any money left in your FSA on December 31 will be forfeited, so it's crucial to make sure you've spent your balance before then.

On the other hand, some employers offer a grace period - usually until March 15 of the following year - allowing you extra time to spend your FSA funds. Others may offer a carryover option, which lets you roll over up to $660 (2025) of unused funds into the next year's plan. Be sure to confirm your plan's specific rules with your HR department or benefits provider.

Maximizing Your FSA Funds

Now that you know your deadline, it's time to focus on how to maximize your FSA funds. Many people are surprised by how many expenses qualify for FSA reimbursement, so if you have a balance left, there are plenty of ways to spend it wisely.

FSAs can be used for a wide range of medical expenses that insurance may not cover. Examples include:

• Co-pays and deductibles - Any out-of-pocket costs for doctor's visits, lab work, or hospital stays are eligible for FSA reimbursement.
• Prescription medications - If you have any prescriptions that need to be refilled, now is the time to stock up before the year ends.
• Over-the-counter medications - Items like pain relievers, allergy medications, and cold remedies qualify.
• Medical devices - Items like blood pressure monitors, thermometers, and even first aid supplies can be purchased with FSA funds.
• Vision and dental care - If you need new glasses, contact lenses, or dental work, these expenses are FSA-eligible and can help you use the remaining funds.

Aside from traditional healthcare costs, some lesser-known expenses also qualify for FSA reimbursement, including acupuncture, chiropractic care, smoking cessation programs, and even sunscreen.

Don't Forget Dependent Care FSAs

If you have a Dependent Care FSA, the rules are slightly different, but the urgency is still the same. Dependent Care FSAs cover childcare and dependent care expenses, such as daycare, preschool, or after-school programs. These funds must be used within the plan year, so submit reimbursement requests before your deadline.

Strategies to Avoid Losing FSA Funds

No one likes losing money. Fortunately, there are a few strategies you can use to ensure your FSA funds don't go to waste:

• Schedule Last-Minute Appointments - If you've been putting off any healthcare visits - whether it's a dental cleaning, vision check-up, or even a specialist appointment - now's the time to schedule them. Contact your healthcare providers to see if they can fit you in before the deadline.

• Stock Up on Eligible Items - Over-the-counter items like allergy medications, first aid supplies, contact lenses, and even certain skincare products are eligible for FSA reimbursement.

• Submit Reimbursement Requests Early - If your FSA plan allows for reimbursement of past expenses, make sure to submit your receipts and documentation before the deadline. Waiting until the last minute can lead to mistakes or delays in processing.

The Takeaway

FSAs offer a valuable way to save on healthcare and dependent care costs, but using your funds before they expire is crucial. By understanding your plan's deadline, taking advantage of eligible expenses, and using strategies to maximize your balance, you can ensure that none of your hard-earned FSA dollars go to waste.