The IRS recently changed its “use it or lose it” rule for Health Care Flexible Spending Accounts (FSAs) to give employers the option to let employees carry over up to $500 of unused funds to the next plan year. Here’s how it affects you:
- If you have a balance of $500 or less in your Health Care FSA, you don’t have to do anything. Your balance will carry over for the 2014 plan year.
If you have more than $500 in your Health Care FSA, you should spend the amount above the $500 carryover limit before Dec. 31 to avoid losing any money you’ve contributed. Here are some tips to get you started:
STEP 1. Check your balance.
If you’re not sure how much you have left, the first step is to check your balance. Just go to EmployeeConnect > Your Benefit Resources to keep track of your FSA.
STEP 2. Review what you’ve spent.
Make sure all your eligible medical, dental and vision expenses have been deducted from your account. If not, submit those claims now.
STEP 3. Start spending.
If you have any money left in your account after Step 2, there are several ways you can spend it before the year ends:
- Schedule health appointments. Although your in-network medical and dental preventive exams are provided at no cost to you, you can use the money in your FSA to cover any follow-up care or lab work. You can also use the money for visits to a specialist, chiropractor, dermatologist or acupuncturist.
- Update immunizations. These expenses are FSA-eligible.
- Think vision care. Use your FSA funds to cover your eye exam, prescription sunglasses, additional contacts, contact solution or laser eye surgery.
- Visit the drugstore. Most over-the-counter medications require a prescription from your doctor. It may be worth requesting one if there are specific OTC medications you take often. Then you can stock up for next year. Also, according to the Employers Council on Flexible Compensation, there are more than 32,000 OTC items that do not require a prescription, such as bandages and Band-Aids. Now might be a good time to create or update a first-aid kit for your home.
- Get your refills. Are you taking a maintenance medication? If your current supply will run out soon, see if you can get a refill for another 90-day supply now.
- Get medical supplies. You can use your FSA to buy supplies you need, such as a knee brace, blood pressure monitor, breast pump or special orthotics.
- Focus on wellness. If your doctor says it’s medically necessary, you can use your FSA to reimburse yourself for a tobacco-cessation or weight-loss program.
- Think about your needs. Some items may be FSA-eligible if they support a specific health need. For example, if swimming helps relieve your rheumatoid arthritis, some of your swimming-related costs may be eligible. Think about all you do to support your health or manage a condition, and then research which expenses can be reimbursed.
As always, keep your receipts. For more information about FSA rules, see IRS Publications 502 and 503 at www.irs.gov.
Note: Dec. 31, 2013, is the last day to incur expenses. March 31, 2014, is the deadline to submit your claims.
Published: November 2013