MAXIMIZE YOUR FLEXIBLE SPENDING ACCOUNT (FSA) BENEFITS
The main purpose and benefit of contributing and using an FSA are any contributions made are pre-tax dollars. However, any qualified medical expenses paid for using the FSA are tax-free dollars. So you effectively pay no taxes on those expenses, by reducing your taxable income.
Flexible Spending Accounts (FSAs), can help you to spend less on your health care while experiencing the maximum tax benefit. However, you must use monies within the current calendar year to reap the rewards. By spending all of the money in your account before the year-end deadline you ensure you are getting the most bang for your buck.
FSAs are pre-tax monies that are placed in an account and are available for use only on approved medical expenses. They differ from a health savings account, HSA, in that the money contributed can only be used for that calendar year. In other words, the FSA accounts are “Use it or Lose it”. As the year quickly draws to a close the question becomes, have you used it?
Common eligible expenses include dentist and doctor visits, procedures, and co-pays, prescription drug costs or co-pays, laser eye surgery, eye exams, contacts, eyeglasses, and chiropractor visits.
If you have any medical conditions that require special equipment or treatment, these expenses are typically covered as well.
While there are no exceptions that allow that money to be directly paid back to you, there are more options than you might expect as to how to spend the extra money. IRS set a maximum FSA contribution limit in 2019 at $2,700 per qualified FSA. If you have monitored the amount spent during the year, you have an idea of what is left to spend down as December quickly approaches.
There are two cases where you can get a little extra time to spend that money.
- A rollover option. This allows you to move up to $500 to next year’s balance.
- Grace period. Because most plans fall on the calendar year, this option allows you to use the money for up to 2 ½ months past the end of the year. Why is this? Because during the first few months of the year your account has accrued little funds.
The IRS re-evaluated the FSA “Use it or Lose it” rule because many people were afraid of it (for good reason) and did not contribute at all. Now, the IRS is now allowing employers to implement a $500 carryover rule at their discretion.
Most FSA accounts come with a debit card and usually have one or the other of these two options but CANNOT have both. However, if you are required to submit a claim, be sure to watch the claim windows in which you are required to submit a claim.
How to spend FSA accounts?
If you have quite a bit left in your account, don’t despair. The list of things that you can spend the money on however is pretty large, leaving many surprised what they can purchase using their FSA account. To get a full listing of what you’re allowed to spend money by visiting an online FSA store. These stores only sell items that qualify approved purchases using your FSA account.
Some out-of-the-ordinary expenses you can pay for using your FSA account also include:
- Chiropractor visits
- Artificial teeth or limbs
- Qualified service animals, such as a guide dog, including food and grooming costs
- Travel that was required for medical treatment.
You may also use the FSA for expenses such as hearing, vision, and dental services even if you don’t have insurance for those services.
Keep track of your FSA account throughout the year and spending in moderation throughout the year will also help to reduce the scramble to use money that you have left as the year comes to an end. Despite the hassle of having to make sure all the money is spent, FSA accounts are a good way to avoid paying taxes on money that is used for medical expenses.
About Bissell Eye Care: John D. Bissell, OD owns and operates Bissell Eye Care servicing Northern Pittsburgh and Alle-Kiski Valley regions. With two locations to treat patients, we offer evening and Saturday appointments. Bissell Eye Care provides comprehensive eye examinations for the entire family beginning as early as 6 months, ocular disease detection and treatment, eyeglasses, sunglasses, activewear, contact lenses, and low vision examinations for those with significant vision loss. We accept most types of vision and health insurance plans. For more information, visit bisselleyecare.com or call our Bakerstown Office at 724-443-6767 or Natrona Heights office at 724-226-0444.