FSA Contributions do not Roll Over
If you have contributed funds to a flexible spending account (FSA) this year, you have approximately two weeks left (December 31 deadline) to use the funds before they vanish into thin year. And that would be a true shame, since it was your money!
On top of that, 2011 FSA changes present another interesting dilemma. As part of the Affordable Care Act, you can no longer purchase over the counter medicine or drugs without a prescription with your FSA funds starting in 2011. Update: The IRS has begun permitting a $500 rollover of FSA funds – however, your employer has to adopt this (it is not automatic for everyone).
Here are three ways that you can use up this year’s remaining FSA balance before it’s too late (make sure your employer’s plan allows each of the following).
1. Eyeglasses or Contacts
If you have a decent balance you need to use up, eyeglasses are an FSA eligible medical expense that you can use your FSA to pay for. I’m a big fan of purchasing glasses online because they are usually one-tenth of the price and you can purchase a few different pairs and pick out a favorite. A while back, I wrote a guide on how to buy glasses online.
Contacts are FSA deductible as well.
2. Over-the-Counter Drugs/Medicine
Due to the 2011 FSA changes mentioned earlier, you will no longer be able to purchase over the counter drugs and medicine with your FSA funds. But what is stopping you from loading up on the items that you consistently use in the remaining days in 2010? Nothing. So go for it. Just make sure you take proper precautions when doing so, so that down the road you aren’t using expired medicine because you bought so much of it.
Yeah, your pharmacist might be a little concerned when you walk up to the counter with 10 bottles of Nyquil and 10 boxes of pain killer, but it’s your money, so go for it.
3. Dental Visit/Annual Physical
If you’re past due for a dental visit or annual check-up with your physician, you can try to squeeze in an appointment before the new year and use your FSA to cover your co-pay or any additional charges.
4. Prescription Medicine
If you do visit your doctor, you can ask them if they will cut you a prescription for an extended quantity. For example, if your prescription is for the standard 30-day supply, you could ask your doctor if they will make out a prescription for a 90-day supply. This way, you can pay for everything up front and use up that leftover FSA money instead of using funds next year for the same prescription.
More FSA Eligible Items
Check out IRS Publication 502 for a complete list of IRS FSA eligible medical expenses.
What are some clever ways you have used to deplete your FSA funds?