If you had higher than expected healthcare expenses and went over budget last year, how can you stay on track in the coming year? Resolutions are nice, but the most effective way to have your best year yet is to make an FSA checklist — and understand all the valuable ways you can use your FSA account. Here are some important budget tips you need for the new year.
Budget for health expenses
The fact that the full amount of your annual FSA allocation is available at the beginning of your plan year is one of the best parts of having an FSA, but it can also be one of the most stressful. It's great to have access to the full amount if you're hit with an unexpected medical bill or need an emergency procedure.
But if you're trying to determine how to use your FSA funds throughout the entire year, it can be difficult to strike a balance between spending too much and not spending enough at any given time throughout the year. If you struggled with budgeting last year, try looking at how much you spent and when — and make note of it so you can adjust your spending for a more productive (and financially secure) new year.
Review last year's health expenses
The first step to creating the best budget for your FSA is to sit down and look at last year's health expenses. Create a document that outlines your monthly FSA spending from last year and the items or services you purchased. Did you spend most of your funds in the first month of your plan year? Did you have a lot of funds left over at the end of the plan year? Now is the time to dig through your spending and create a month-by-month breakdown of your previous plan year's FSA expenses. This will make it much easier to estimate your expenses for the year to come.
To do: Make a document that outlines your monthly FSA spending from last year and the items or services you purchased. For example, in January you spent $15 for prescription medicine and in February you spent $350 for an emergency procedure.
Estimate your monthly spend
Now that you've outlined your FSA spending from last year, it's time to estimate your monthly spending. Model your monthly estimate on last year's spending, but don't forget to account for new or upcoming medical expenses.
For example, if you know you'll need to pay for braces for your kids this year or if your new year's resolution is to quit smoking, be sure to estimate how much that will cost. Of course, unexpected expenses might arise throughout the year, so try and leave some FSA money leftover in your estimate.
To do: Create your monthly estimate for the new year. The estimate should include all medical visits, prescriptions services, and eligible OTC products you plan to pay for with FSA funds.
Plan for what's left over
The final budgeting step is to plan for what to do with your leftover FSA expenses. Even though unexpected expenses may arise throughout the year and you might have less money leftover than you expect, it's still a good idea to have a plan for whatever funds may remain once you’ve covered your expected costs.
The best way to plan for remaining funds is to create an FSA wish list. Your wish list can include FSA eligible items and services (like the ones we’ve listed below) that may need to be replaced or updated in the near future.
To do: Create your FSA wish list and keep it updated throughout the year. This will help you avoid scrambling for last-minute items at the end of the year. Plus, you'll be able to spread out your FSA spending more evenly throughout the year.
Set a goal of buying at least one FSA eligible item with unbudgeted FSA funds each month. It's the perfect way to take care of yourself, and your family, throughout the entire year.
Plan for your year in health
1. Get pregnant
Ready to have a family? Plan to set aside FSA money for pregnancy tests and ovulation tracking, infertility treatments, in vitro fertilization (IVF), vasectomy reversal, fees for egg donors, egg recipients (to the extent they are performed on the accountholder, spouse, or dependent. Expenses for a surrogate are not eligible). FSA funds can also cover Viagra, prenatal vitamins and short-term egg and embryo storage.
2. Or don't
FSA accounts can be used to buy contraceptives and condoms; have a tubal ligation or vasectomy; or pay for the morning after pill.
3. Care for baby
Once your baby arrives, FSA funds can help foot the cost of eligible products for baby and mom, like breast pumps and accessories, lactation consultants or breastfeeding classes, baby rash ointment, children's sunscreen, baby breathing monitors, and more..
4. See clearly
If your health insurance excludes vision care, your FSA can fill the gap. You can use your FSA for prescription eyeglasses, prescription sunglasses and non-prescription reading glasses, including readers that block blue light (as long as they have a vision correction component). Contact lenses and supplies, such as cleaning solution and lens cases, qualify, as do cataract surgery and laser eye surgery.
5. Listen up
FSA funds can pay for hearing aids (including OTC hearing aids), hearing aid batteries, and maintenance. They can buy telephones for the hearing impaired, as well as ear drops and ear wax removers.
7. Prepare for your period
Sanitary pads, tampons, menstrual pain relievers, and other menstrual care product all qualify as FSA expenses.
8. Get ready for cold, flu, and COVID season
COVID-related products such as face masks, hand sanitizer, and hand sanitizing wipes qualify for FSA reimbursement. So do over-the-counter cold, flu and allergy medications — now is a great time to check your supplies.
9. Sleep tight
FSA accounts can be used for CPAP machines and the accompanying masks, headgear, cleaning products, hose holders and pillows; snore guards; over-the-counter sleep medications; and mouth guards to prevent teeth grinding.
10. Monitor your health
Equipment to manage chronic conditions can add up. Fortunately, your FSA account can be used to pay for asthma oxygen flow monitors, blood sugar test kits, blood pressure monitors, pulse oximeters and more.
11. Put your best foot forward
Soothe your aching feet by using FSA money for orthotics or arch supports, foot care products, corn removers, and other products for healthy feet.
12. Prevent and treat injuries
Use your FSA to purchase athletic tape, athletic braces and bandages, athletic mouth guards, and other products to prevent injury during sporting activities.
13. Get comfortable
Ease your aches and pains with carpal tunnel supports, back braces, heating and ice pads, physical therapy and pain relief devices, all of which qualify for purchase with your FSA.
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