Flexible Spending Account 101: pre-tax health spending
Understanding Flexible Spending Accounts
I know what you're thinking. "A Flexible Spending Account (FSA)? I'm perfectly healthy. Do I need that?"
During this open enrollment season, you might want to research a FSA. These employee benefit add-ons have gotten more popular over the last five years (the CDC reports) as they're a pre-tax way to save on qualified out-of-pocket health expenses. If growinghealth care costsare a concern to you, then know an FSA lets you pay for over-the-counter medical products, dental and eye care, and for co-pays, deductibles and co-insurance for medical services.
Here's the rundown...
Each year, if your company offers it, you can sign up for an FSA and select how much you want to set aside for the year. The annual contribution limit is $2,500, or $5,000 if married couples both have their own FSA through their respective employers (in which they can each contribute $2,500 for a total household deferment of $5,000).
The U.S. Treasury recently made FSAs a little bit more flexible by adjusting the "Use it or Lose it" rule. Previously, FSA funds not spent before the FSA plan year ended would be forfeited to the employer. Now an employer has a few options: give employees a carryover of up to $500 for FSA funds or allow a grace period (two and a half months after the plan year ends to use FSA funds). Employers can't allow both options simultaneously and are not obligated to offer either option.
Best of all, an FSA is pre-tax - letting you increase your spendable income. And, an FSA is versatile depending on your needs.
Ways you can use your FSA:
Plan ahead and think about FSA eligible products that you could use throughout the year ranging from first aid to baby care items.
- Use it toward a cleaning at the dentist's office.
- Visit a chiropractor or an acupuncturist.
- Get seasonal items such as first aid kits and sunscreen for summer road trips, warm steam vaporizers for winter, and hot/cold packs for after a fall work-out.
- Shop these eligible products and more at FSAstore.com.
- FSAs can also cover a yearly eye exam,contactlenscare and eyeglasses.
- Be heart healthy and get blood pressure monitors.
- Expecting a baby? Everything from breast pumps to prenatal vitamins are eligible expenses.
Have a 6/30 FSA deadline? Need to spend remaining FSA dollars? Check out our bundles - they're like convenient care packages for your needs!