I t’s getting to be that time of the year. A time where flexible spending accounts for medical expenditures that are taken pre-tax will need to be spent, or in many cases forfeited by the end of the year.
Why not take a few minutes to check your balance in your account? If you’ve had a really healthy year and an excess balance – CONGRATULATIONS! You may have some monies that you need to spend on such things as eye glasses, contact lenses, or prescription sun glasses.
A Flexible Spending Account(also known as a flexible spending arrangement) is a pre-tax special account available to those with job-based health plans. This type of account allows you and your employer to contribute pre-tax creating a fund for you use to pay for certain out-of-pocket health care costs. The contribution limit for 2015 rose to $2,550.
With some of the higher deductible and company self-insured medical programs, many employees are turning to Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs) to help employees offset the cost of higher deductibles.
Funds in your FSA can be used to pay for certain medical and dental expenses, including copayments and deductibles. FSA funds on prescription medications, as well as over-the-counter medicines with a doctor’s prescription. Reimbursements for insulin are allowed without a prescription. FSAs may also be used to cover costs of medical equipment like crutches, supplies like bandages, and diagnostic devices like blood sugar test kits. However, you can’t spend FSA funds on insurance premiums.
Although the US Treasury offered a two and a half month grace period at the end of the year for amounts left in the account up to $500, employers don’t have to agree to carry over the monies in the account. At the end of the year or grace period, you lose any money left over in your FSA. So it’s important to plan carefully and not put more money in your FSA than you think you’ll spend within a year on things like copayments, coinsurance, drugs, and other allowed health care costs.
Since many employers are presenting their health care benefit for 2016, now may be the time to review your health spending history and how FSA’s and HSA’s can play a role in pre-tax planning. For those of you that have monies left in your FSA accounts, perhaps it’s time to schedule that dental or eye doctor appointment to spend down those funds.
For a complete list of guidelines visit the IRS website
on Flexible Spending Accounts.