Warning: You could lose money in your flexible spending account
Health-care flexible spending account owners should mark one key date on their calendars: March 15.
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These accounts let you put away pretax money for medical, dental and vision expenses. But there is a limit to how long those funds are available to you. So the funds you contributed in 2017 often need to be used in that calendar year.
But there is a caveat: Many accounts offer a grace period into the next year that lets individuals use up any funds they have left.
The deadline this year is March 15.
Alternatively, some plans have a carry-over provision, which lets you bring over up to $500 into the next year.
Expect to have one or the other; plans don’t typically offer both a grace period and carry-over provision.
“Understand your account and know what your deadlines are,” said Jeremy Miller, founder and CEO of FSAstore.com, a website that sells FSA eligible products.
If you don’t know the rules, you can find out by calling the account administrator or talking to your human resources department, advised Jody Dietel, chief compliance officer at WageWorks, a provider of tax-advantaged employee benefit plans including FSAs.
If you find out you still have funds to use by March 15, there are several options to consider.
First, review all your paperwork from the past year to check for expenses you may not have submitted, Dietel said.
Run through your list of health-care providers, prescription drug portals and dental and vision carriers to check for bills that were not sent to your FSA.
Then expand beyond that list to include all the other kinds of care you seek, including acupuncture, chiropractic care or physical therapy, to name a few.
“There’s all kinds of expenses people incur but forget to submit to their flexible spending account,” Dietel said.
Once you’ve accounted for all of the money that’s already been spent, think about the other care that you may have put off.
“There may be other medical concerns that you just haven’t gotten around to addressing,” Dietel said, including doctors or dentist appointments you may have put off.
Once you have taken those steps, you can make other purchases that are eligible for FSA reimbursement.
Anything that is considered a drug or medicine, such a DayQuil or Advil, will need a doctor’s prescription in order for your FSA to pay you back. Other over-the-counter products, such as Band-Aids, sunscreen, or ice packs, can be submitted without a prescription. You may also be able to get reimbursed for mileage and tolls you paid while traveling to your doctor’s office.
Not all health-related expenses are FSA eligible, cautioned Miller. Wearable fitness trackers like FitBits or apps for tracking your vitals do not qualify. Most vitamins, except for prenatal vitamins and glucosamines, also are not included.
While a grace period means you have until March 15 to incur FSA-eligible expenses, there is a different deadline, known as the run-out period, by which you have to submit those claims. Those dates usually run between March and May, according to Dietel.
Now is a good time to revisit how you are submitting expenses to your FSA.
Dietel suggests putting all of the receipts in one folder and periodically submitting those expenses throughout the year.
“Set up a system to be sure you’re taking full advantage of the account,” Dietel said.
Additionally, check to see if how much you are contributing matches up with what you are spending. In 2018, employees can put in up to $2,650 in their health FSAs.
While most employers prevent you from making changes now unless you have had a life-changing event, it is important to keep in mind for the next open enrollment period.
“With rising out-of-pocket costs, these accounts are more important than ever,” Dietel said. “Using these accounts and using them effectively is a really important discipline.”
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