Health Care FSAs can help you spend less on health care, but only if you use yours correctly — by spending all the money in the account before a year-end deadline.
**This is also applied to Limited Purpose FSAs but only eligible dental and vision expenses are covered.
In other words, Health Care FSA funds are “use-it-or-lose-it”, and any unused money left over at the end of the year is no longer yours. Unused funds go to your employer, who can split it among employees in the FSA plan or use it to offset the costs of administering benefits.
Before we talk about how to spend it, you should also know there are three options for extending the usage deadline of that remaining funds.
1. Runout Date- An extra time that an employee can submit manual claims for services render in the previous plan year to be reimbursed for that previous plan year's funds.
2. Grace Period- Give users 2.5 months after the last day of their plan years to spend down their remaining FSA funds.
3. Rollover- Allow FSA users to move up to $570 (2021) of the previous plan year's contribution into next year's allocation (without counting against the overall contribution limit) to avoid forfeiting money to their employers at year's end.
So how should we spend it? If you need to empty out your FSA account, here are some smart ideas.
Going for the annual physical exam
The end of this year is a good time to arrange a full-body examination to ensure that your body is functioning normally, especially since, if you’ve met your annual deductible, your insurance company may cover more of the cost. You can apply your FSA funds towards your part of the bill.
Giving alternative medicine or treatment a try
You can use your FSA dollars on acupuncture, acupressure, and chiropractor visits, for example, to regulate your body.
Taking care of your eyes
Vision expenses are typically covered through FSA plans, though, so December may be a good time to get an eye exam. This is an especially good idea if you don’t have vision insurance and have to pay out of pocket.
You can generally use your FSA funds on the contacts or eyeglasses you purchase, too, as well as contact accessories such as cleaning solutions and cases. Even prescription sunglasses may be covered.
Taking care of your teeth
If it’s been a while since your last visit to the dentist, try to squeak one in. Generally, you can use your FSA money to pay for dental services, including the co-pays or out-of-pocket expenses associated with everything from basic cleanings to procedures including fillings, root canals, crowns, and even gum surgery.
Filling up your first-aid kit or medicine cabinet
How’s your supply of necessities like sunscreen or basic cold and allergy remedies? Now may be a good time to go through your medicine cabinet, toss out anything that’s expired, and stock up on anything you need more of. Items like hot/cold packs, braces, and first-aid kits are covered. You can typically even spend your FSA dollars on sunscreen that has broad-spectrum protection and an SPF of over 15. Certain cold and flu medicines are also a good bet. Or, if you’re planning to spend the holidays with relatives and their pets make you sneeze, you can use your FSA funds on allergy meds.