Four Tips for Using FSA Money Before New Year’s

At the end of the year, we can all get a little scatterbrained. Between work deadlines, gift shopping, baking treats for the kids’ holiday parties, making travel arrangements, and stressing over what to write in the greeting card, there’s just not enough time to get everything done. So we forget stuff — important stuff like our flexible spending account (FSA) money.

FSAs are funded through a voluntary salary reduction program with your employer to give you a tax break on health costs. The money you contribute — up to $2,550 a year in 2015 — can only be used for certain medical expenses, like immunizations and medical copays.

If you don’t use your balance by the end of the year, you forfeit it, because that money generally can’t be carried over into the New Year. (Some employers now offer the option to carry over a maximum of $500 into the next year.) So those FSA funds are definitely something you don’t want to put on the back burner this time of year.

Nonetheless, the 35 million people enrolled in FSAs wasted an average of $170 each last year because they aren’t aware of the spending deadlines, reports FSAStore.com, an e-commerce site that specializes in FSA-eligible products.

Insurance experts see it happening every year. “At the end of the year they’re trying to wrap stuff up at work and they don’t pay attention that they have dollars left,” says Maureen Fay, a spokeswoman for Aon Hewitt, a global health and human resources consulting agency. “It’s your money and you’re kind of throwing it away if you don’t take advantage.”

To make the most of your FSA money, here are four tips to help you use it before you lose it:

1. Schedule Annual Checkups

Yearly checkups usually have FSA-eligible expenses attached to them, like copays or deductibles. So take advantage of all of those doctors in your smartphone’s contact directory by making appointments not only with your primary-care physician, but with your specialists as well. You may be surprised how many specialists and dentists can fit you in this time of year, with patients canceling due to illness or simple holiday burnout.

2. Purchase Eligible Medical Products and Procedures

While eligible expenses are typically associated with copays and prescription medications, there are actually up to 6,000 eligible items, reports FSAstore. (Check with your employer to see which qualifying medical expenses are covered in your plan.)

You can spend the FSA funds on anything from acupuncture to antacids, guide dogs to wheelchairs, and mastectomy bras to speech therapy. “This is the time of year when we see a lot of LASIK surgery,” Fay jokes, noting that consumers often save the biggest expenses for last.

3. Get a Jump on Vacation Plans and New Year’s Resolutions

In addition to big-ticket procedures, you can also spend your FSA dollars on some of the more popular New Year’s resolutions (with a doctor’s note). So plan ahead and use your contribution on things like health-club dues, weight-loss drugs, or smoking cessation programs.

And if you’re planning a family vacation in the next year, you can stock up for that beach getaway by purchasing sunscreen. Even that extra bottle of saline solution and emergency stash of motion-sickness pills in your travel case are covered.

4. Double-Check Your Deadlines

While the spending deadline is Dec. 31, 2014 (or March 15, 2015 if you have a grace period), check with your employer to see if you have a few extra weeks to turn in your reimbursement forms. And if your plan requires a prescription to get reimbursed for over-the-counter meds, get it in writing well ahead of the deadline so you have time to buy them.

Finally, employers are now allowed — but not required — to let employees carry over up to $500 in their FSAs from year to year. So check with your human resources department to see if your company allows you to carry over a portion of your unused balance.

Tip for Next Year: Estimate Your Expenses Ahead of Time

If you over-contributed this year, you can save money next year by more accurately estimating your expenses using your employer’s FSA-contribution calculator. The calculator will total up your anticipated doctor’s visits, copays, and prescription costs to give you a ballpark contribution amount and an estimate of your potential tax savings.

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