This is a guest post by FBS Benefit Consultant, Blake Denby.
Recently I was at my annual vision checkup when I noticed the optometrist had placed a big sign in the lobby saying “Don’t forget to spend your FSA dollars”. This made me think about all the people that let hundreds of dollars a each year go unused and eventually lost. With all the things that are qualified as FSA eligible, there really is no reason not to squeeze every dime out of that account. It is your money, so let’s talk about how to maximize the use of your FSA and optimize your planning for the new plan year.
What is an FSA?
Flexible Spending Accounts (FSA) are accounts set up by employers that allow employees to set aside pre-tax dollars, so they can be dedicated toward medical expenses. These accounts fall under Section 125 of the IRS tax code and are usually administered by a third party. FSA’s are currently limited to $2,650 per year per employer (increasing to $2,700 in 2019), but if your spouse’s employer also offers an FSA, they can contribute the full amount to a separate account. Some employers offer either a grace period after the new plan year starts to give you the chance to use old funds or will allow you to carry over up to $500 to use in the new plan year. In contrast with an HSA, if neither of these are an option, then any unused funds are forfeited.
Maximizing Your End of Year Spending
If you are one of those people that have money left in their FSA at the end of the year, you will want to spend those funds in the best way possible. There are literally thousands of healthcare services and items you can pay for with your FSA. A few things you could fit into the end of the year include:
- Vision and dental appointments for you and your dependents. Chances are you can find a day to make appointments to get everyone’s vision and dental checkups. All services like glasses, contacts, fillings, and even braces are FSA eligible.
- Stocking Up. First aid supplies are also FSA eligible and will store easily. Bandages, wound wash, burn care items, and many more items can be bought with those remaining funds. You may also want to look into purchasing extra contacts.
- Diabetic supplies. This one is possibly the most important to many people. Testing strips, glucose tablets, and even a new glucose meter can be purchased with FSA dollars.
- Unclaimed reimbursements. Look over your medical expenses from the last year and see if there are any expenses that you could be reimbursed. Chances are there are a few prescriptions or even a copay or two. Just contact your FSA administrator and ask for a claim form.
Optimize your New FSA
While some people have money left in their FSA at the end of the plan year, many others drain their account in only a few months. Take a few minutes to plan for any and all medical expenses that you may have in the upcoming plan year. A few things to think about for each person on your plan include:
- Prescription co-pays: What is the copay for each of your ongoing prescriptions? Multiply that by twelve to make sure you have enough to cover them all.
- Dental procedures: Do you or one of your kids need braces or wisdom teeth removed? Even with your dental insurance these can be expensive. Try to get a quote from the dentist so you can include these expenses in your planning.
- Vision correction: Is it time for everyone to get new glasses? Are you thinking about vision correction surgery? Add that to your calculations.
- Doctor co-pays: Primary care, emergency care, day clinics, x-ray labs, and blood work all require co-pays. Look at what you spent on these in the last year so that you can have a good number to work from.
- Various other FSA eligible items: as mentioned before, there are a ton of items that you can get with your FSA dollars at the end of the year, but you can also budget for them in your new plan year as well.
Look to your TPA for help
In theory, your third party administrator of your FSA should have tools for you to check your FSA, make claims, and even calculate your future expenditures. If they do not, then you should consider switching to a new administrator in your new plan year. If you need help selecting one, contact us to speak to a consultant.