The great thing about flexible spending accounts (FSAs) is that roughly 30% of the amount you put aside through your company is essentially free spending money you’d normally lose to taxes. The catch? For most plans, you have to spend it all by year’s end or you lose it forever.
Unfortunately, that’s like diligently saving a couple thousand dollars throughout the year, withdrawing it from an ATM and then placing that money into a garbage can. This year, if you have an FSA, make sure you aren’t leaving money on the table by spending it on FSA-qualified medical expenses before December 31 (people often leave an estimated $50 to $100 behind, according to Nerdwallet).
You now have more FSA spending options
Fortunately, the CARES Act has loosened the rules on what qualifies as a medical expense (retroactive to the beginning of 2020). You can now use FSA funds on over-the-counter medications and menstrual care products, giving you more ways to spend from your FSA account (which allows for contributions up to $2,750 in 2020).
Confirm if your FSA allows for extensions or roll overs
Before you rush off to CVS, check with your employer and find out your FSA balance and whether it’s a “use it or lose it” account. Depending on your plan you might have options, including a roll over up to $500 into next year, or an extended grace period of two-and-a-half months to spend down the account. With those options, you might want to spend more strategically, perhaps on medical needs you’re expecting to pay for in January. Either way, you’d have a little more breathing room to empty your account.
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Once you’ve confirmed your FSA balance, you can spend every last dime on medical expenses, including health insurance deductibles and copayments (but not insurance premiums); prescription medications; over-the-counter medicines; and other supplies like crutches, blood test kits, and bandages.
For a comprehensive list of what’s qualified as an FSA expense, check out the FSA Store or HealthProductsForYou, just to be sure.
If you don’t have any pressing need to spend money on medical expenses, just think of some—this is a good time of year to re-up on contacts or glasses, load up on over-the-counter drugs, or maybe squeeze in an extra teeth cleaning visit with your dentist. Other ideas include:
Acupuncture treatmentsAllergy medication (over-the-counter and prescription)Aspirin and other over-the-counter pain relieversBlood pressure monitorsBreast pumpsBreastfeeding classesChildbirth classesChiropractic careCondoms and other contraceptivesContact lensesCough drops and syrupDental treatmentsDiabetic monitors, test kits, strips and suppliesDNA tests from 23andmeDrug and alcohol addiction treatmentEye examsFertility monitors and treatmentsFirst aid kitsFlu shotsHearing aids and batteriesInsulinLaser eye surgeryMental health counselingMileage for travel to and from health care appointmentsNight guardsPhysical therapyPregnancy testsPrescription drugsPrescription sunglassesOver-the-counter reading glassesSmoking cessation programsSunscreen (with SPF 15 or higher)Walking aids like canes, walkers, and crutchesThis post was originally published in 2017 and updated on December 10, 2020 with more current information.
