If you have a lot of money in your flexible spending account, you may be feeling pressured to spend it by December 31st.
An FSA is a pre-tax fund for medical expenses, similar to a medical savings account. According to industry estimates, More than 70 million Americans have one or the other.
“Both are ways for people to spend a little more on health care,” he said. Jake Spiegela researcher at the Employee Benefits Research Institute (EBRI), a nonprofit research firm.
However, there are important differences. HSA money rolls over to the next year. Most FSA funds do not.
HSAs are combined with health insurance plans and belong to eligible individuals, Spiegel said. In contrast, the FSA is “an account that doesn’t really exist on paper until the money actually needs to be spent,” he said. “Technically, they are owned by the employer.”
At the end of the year, any unused FSA funds “technically go back to the employer,” Spiegel said.
Many of us leave funds in our flexible spending accounts on the table
FSA plans include: Grace period of up to 2 and a half months, the employee can use the money in the following year. Additionally, some plans allow you to roll over a portion of your unused funds to the next year. this year, Maximum carryover is $610, or one-fifth of the annual contribution limit of $3,050. (next year, FSA contribution limit increases to $3,200. )
But many employees leave the FSA’s money on the proverbial exam table. EBRI’s own 2019 analysis of his FSA database found that 48% of accounts had balances at year-end, with an average forfeiture amount of about $370.
But here’s the good news. Even if you leave your FSA funds unused, you can still save money in the end. Because FSA funds are pre-tax dollars, they increase an employee’s purchasing power by the amount of taxes they don’t pay. At a tax rate of 25%, if he deposits $2,000 in the FSA, he will save $500.
“Even if you have a few hundred dollars left at the end of the year, you still have a chance to win,” Spiegel said.
If you need to spend your FSA money now, American Retailer can help.
Amazon There is an FSA store.that’s right walmart.There are also real ones FSA storean online clearinghouse for everything eligible for the FSA.
“We carry everything from over-the-counter medicines to menstrual care products to premium skin care products for acne treatment,” said Rachel Rouleau, chief compliance officer at FSA Stores. “There are literally thousands of ways to spend FSA money.”
We’re also happy to help you use your FSA money. Here are 10 ideas.
New coronavirus test? contact lens?Yes, it’s FSA eligible
new coronavirus test. Yes, they are covered and many people are buying them now.
contact lens. These qualify for FSA. And if you wear them, you’ll probably need more.
painkillers. It’s cold and flu season. This seems obvious.
Unpaid medical bills. Check out that pile of banknotes. You may still have co-pays from doctor visits that you have long forgotten about.
dentistry.Sometimes you actually need it, sometimes you don’t. go to the dentist every six monthsBut if it’s been more than a year, now might be the time.
yoga. Trumed, which works with providers, says fitness classes and apps may be eligible for FSA with a doctor’s approval.
Air cleaner. Technically, air purifiers aren’t covered by his FSA, but treating a legitimate medical condition may be covered.
ancestor kit. According to 23andMe, you should be able to use your FSA funds to cover some or all of the cost of your genetic test. Find a cousin you didn’t know about!
Don’t neglect your taxes.Your best payday may come before your 2023 tax return.Apply early to get your refund faster
Oura ring. These bands are said to track “more than 20 biosignals” from your fingers, everything from body temperature to heart rate to sleep quality.
massage gun. According to the FSA Store, the state-of-the-art Aura Revive heated massage gun is “the tool you need and the pain reliever you deserve.”
