Flexible Spending: Use It or Lose It!

If you have any funds remaining in your flexible spending account (FSA) at work, make sure you use them up before year-end. Otherwise, Uncle Sam gets to keep it. And don’t you already give him enough of your hard-earned money?

You’re probably well aware of the “use it or lose it” provision that prevents you from rolling any unused money in your account over into the upcoming year, and you may have already taken care of it, but I wanted to remind you. The holiday season is a very busy time of year, and this is something you definitely want to take care of as soon as possible.

For starters, ask your benefits coordinator at work how much money you have left in your account. Then, pull together your bills for medical and daycare expenses and figure out what you haven’t yet been reimbursed for, and apply to get your cash.

If you have any money left over, be sure to use it before year-end. This could be the perfect time for you and your family to get your eyes checked. Or to buy some new eyeglasses or contacts. Or to see a chiropractor for your aching back. And, above all, get reimbursed for it!

The IRS has been adding to the number of procedures and expenses that an FSA can cover. You can download IRS Publication 502 at http://www.irs.gov/pub/irs-pdf/p502.pdf for a complete list, or call them at 1-800-TAX-FORM for a paper copy. You’ll be surprised at what is covered!

Of course, you should first ensure that your doctor will okay a particular treatment for you. And obviously, double-check your FSA plan provisions to make sure what you intend to do is covered beforehand. You don’t want to incur any expenses that you can’t apply to your FSA!

Remember, you invested in an FSA to reduce your pretax income and stretch your health care dollars. So, act now to make sure you have enough time left in the calendar to do so!

If you ended up with too much or too little in your FSA this year, or if you’ve always wanted to start one but didn’t know how much you needed to put aside, below are some budgeting tips for you to follow.

FSA Budgeting Tips

1. Go back over your receipts for the year and total up the amount you’ve spent out of pocket on health care expenses like co-payments for office visits, prescription costs, and deductibles.

2. Check with your employer to see if your health insurance plan will increase your share of any fees or co-pays next year, and add any resulting amount to your total in Step 1.

3. If you anticipate any one-time expenses in the coming year, like special surgery or dental care, you’ll need to factor in any portion of the costs that your primary insurance will not cover. You can check with your doctor to get an estimate.

4. In case of emergencies, estimate an additional $50 or $100 for each member of your family.

5. Divide your grand total by the number of paychecks you receive each year in order to determine the amount of pretax salary you will need deducted each pay period. Be sure to fill out the proper paperwork with your Human Resources department.