THE BEST TIPS FOR SPENDING YOUR FSA

Flexible Spending Accounts, or FSAs, are a great way to save money and cover your medical expenses, but there’s a good chance that you’re leaving money on the table at the end of the year. FSAs are tax-advantaged like Health Savings Accounts (HSAs), but the big distinction is that you have to spend the money by the end of the year or you’ll lose it – so if you have anything left on it as the end of the year approaches, you’ll need some useful ways to spend it all.

The good news is that your FSA truly is flexible, in that there is a pretty broad selection of things you can spend it on for your spouse, children, or any other qualifying dependent at the end of the year. We’re talking things that your insurance company would never pay out for.

So if you have any left toward the end of the year, you’ll need to figure out when and how to spend it. You have more options than you might expect, and we’re here to help inspire you.

How to Spend FSA Money Quickly (and Efficiently)

That’s right: FSA funds are use it or lose it, and any unused money left over at the end of the year is no longer yours. You’ll want to spend it all, then, but avoid buying things you don’t need just for the sake of it.

You can usually rollover up to $500 to the beginning of the next year, but anything left unspent goes to your employer, who can split it among employees in the FSA plan or offset the costs of administering benefits.

Take your guess as to which they may be more inclined to do.

What You totally Can’t Spend Your FSA On

Basically, you can’t spend it on things that you’ve already paid for in some way or are for non-medical (likely cosmetic) reasons.

• Adoption fees, but you can pay for medical expenses related to the process

• Child or newborn care instruction, but you can take Lamaze and childbirth classes

• COBRA premiums

• Cold cream

• Breast enhancement, even though a doctor can write a letter of medical necessity after a mastectomy

• CPR classes

• Marriage counseling, even though almost every type of counseling that’s not explicitly “marriage counseling” is covered

• Toothpaste

• Diapers

• Feminine hygiene products

• Funeral expenses

• Hair removal and transplants

• Insurance premiums

• Household help, although nursing services are covered

• No-show fees and late payment fees for physicians

• Non-prescription sunglasses, though prescription glasses are covered

And while that list may seem like a long one, there actually are many more things you can use than things you can’t.

Here’s an infographic that explains a few examples and how they may be conflated:

We’ve got a more comprehensive list towards the bottom, but if you’re trying to spend what’s left in your FSA, here are few resourceful ways to spend it on things you’ve wanted to take care of or stock up on before the year’s out:

• Lasik

• First aid kits

• Drug and alcohol addiction treatment

• Dancing lessons for treatment of a medical condition (with a letter of medical necessity from a doctor)

• Pregnancy tests

• Reading glasses

• Psychologist visits

• Transgender treatments/surgery

• Chiropractor

• Leftover payments and co-insurance payments

• Extra contact lenses

• Bandages and related items (over-the-counter)

• Birth control, condoms, etc.

• Acupuncture

But First, What Counts as a Medical Expense for an FSA?

According to the IRS, a medical expense is:

“Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners.”

Basically, if you used it to treat your health, it’s a medical expense – with the notable exception of your monthly premiums themselves.

Many people will end up paying for their copays at the doctor with their FSA dollars, but in the event you’ve got some left over, you’re probably trying to come up with creative ways to spend it all before you lose it.

You can dig through the IRS publication yourself, or read through this.

Useful Things You Can Spend FSA Money On: