Making the Most Out of an FSA
Learn More What Qualifies as a Medical Expense with a Flexible Spending Account
How much money will be lost to Flexible Spending Accounts in 2017? By now everyone knows that Flexible Spending Accounts can be a great idea – until that money has to be forfeited because it wasn’t spent. Did you know that nearly 29 million U.S. workers have one, and many are unaware that money left unspent in it can be forfeited? (9 Ways to Make the Most of Your Flex Spending Account).
A BASE® Flexible Spending Account gives employees an option to set aside a specified amount of pre-tax dollars from each paycheck to pay for out-of-pocket medical expenses throughout the year. FSA dollars can be used to cover a broad range of costs. In addition to the deductible and prescribed over-the-counter health items, generally it can be used for copays, coinsurance, and prescription drugs and supplies. (It’s Use It or Lose It Time for Many with Flexible Spending Accounts). For a complete list of qualifying medical expenses under the IRS Publication 502, CLICK HERE.
Some examples of expenses you might not know that qualify are:
- Eye Exams, Eye Glasses, and Contact Lenses – Eye exams are recommended annually. Along with an eye exam comes the possibility of a prescription for glasses or contact lenses. Anyone who wears glasses or contact lenses knows that they don’t come cheap.
- Prescribed First Aid Supplies and Sunscreen – It is hard enough to keep enough Band-Aids in the house, along with other first aid kit items throughout the year. Plus, summer will be here soon, and last year’s sunscreen tubes should be thrown out. Stock up and use the health care FSA to do it. Families know that these are necessities. In order to be considered a qualifying medical expense, first aid supplies and sunscreen need to be prescribed by a doctor.
- Hearing Aids – When it comes to hearing aids, the cost of the hearing aids and its batteries, as well as repair and maintenance expenses qualify.
- Diabetic Supplies – Blood sugar monitors, test strips, and any diagnostic testing supplies, including testing for health problems other than diabetes.
- Dental Treatment – Don’t put off that dental exam, filling, or root canal any longer. Having an FSA is now a good reason to go.
- Chiropractor – Whenever a trip to the chiropractor is needed from those long days at the office or cleaning the yard on the weekend, those appointments are eligible under the FSA.
Not sure where to start on how much is needed to put into a Flexible Spending Account each month? One way to avoid the “use it or lose it” rule is to learn what qualifies as a medical expense and how much is needed to cover these costs for the year. Check out the BASE® 125 Cafeteria Plan Tax Savings Calculator, HERE. It is a great indicator for the potential savings that can be realized.
For example, if an employee, with an employer-sponsored FSA, knows they have a $1,000 deductible for the year, and spends roughly $500 on copays, first aid supplies, and other qualifying medical expenses, they would want to align those expenses with their Flexible Spending Account. Any given year can bring about the possibility of unexpected health issues, an extra dental, chiropractor, or eye doctor visit, or illness, so planning ahead is necessary. With proper planning, an FSA is a great tool in helping manage health care expenses for the year. Whether or not the FSA can roll over into the next year, or is forfeited at the end of the year, talk with BASE® and get a plan for the year ahead.
To learn more about what is considered a “qualifying medical expense” or Flexible Spending Accounts (FSA), contact BASE® at 1-888-386-9680.