ShopFSA Mid-Year Changes are now available: What’s my next move?
In mid-May 2020, the IRS made a revolutionary change in light of the public health crisis to open up the option for mid-year changes to FSAs and other insurance plans. In the past, the only times these mid-year changes were allowed were due to qualifying life events like marriage or the birth of a child, but with the COVID-19 pandemic resulting in a sea of changes with how consumers use their flexible spending accounts (FSAs), the option to pursue mid-year FSA changes is welcome and necessary.
Now a month removed from that big announcement, many FSA users are probably wondering: so when can I make changes to my contribution and coverage? Well here's the kicker: FSA mid-year changes are only available for account holders whose employers open them up for their employees.
With that information in mind, let's explore what employees should do next when inquiring about FSA mid-year changes
1. Talk with HR!
Your human resources department should be your first stop to inquire about any substantive changes in your company's benefits and whether there are any future plans to pursue mid-year changes for 2020. Ultimately, it's in your employer's hands to make this decision, but reminding them to weigh the pros and cons of allowing the change if they haven't done so already is the first step.
2. Talk with your FSA account administrator!
If you feel more comfortable, your FSA account administrator, whose information can typically be found on the back of your FSA card if one is available, is a great resource to talk with about your FSA related questions. They'll be able to tell you about your current plan options and any they're aware of, although they may ultimately refer you back to your HR department if your employer hasn't made a decision as of yet.
If mid-year changes are allowed…
If your employer did open up FSA mid-year changes to you and your fellow employees, you essentially have a mini open enrollment to prepare for. Here are a few things to keep in mind:
1. Should I contribute more or withdraw?
One of the unique aspects of these mid-year changes is that the IRS is allowing FSA users to either contribute more to their accounts to meet the 2020 contribution limit ($2,750) or withdraw these funds for personal use (post income taxes). We always err on the side of taking advantage of an FSA's tax benefits, but every person's financial situation is unique, so do what is best for your bottom line.
2. Should I elect a new FSA or drop my current one?
The IRS is also permitting those who had previously chosen to forego an FSA election for this year to elect one mid-year with these changes. If you have the option to add an FSA, now is a good time to explore the thousands of eligible products which will qualify and ways you may be able to save money and reduce your taxable income. And if you currently have an FSA and are considering dropping it under the changes, remember that if you can swing it, FSAs do reduce your taxable income, and there are still plenty of ways to responsibly use your FSA funds this year.
3. How can I estimate my future spending?
If you're stuck pondering your qualified healthcare spending for the rest of 2020, our FSA Calculator can help. This can help give you a full picture of your finances to plan out your future medical expenditures so you can accurately predict the right contribution for you and your dependents' needs.
It's an exciting time to be an FSA user, and you may have more flexibility with your account than you could have ever imagined! Now is the right time to start asking questions and finding out the benefits plans of your organization for the rest of 2020.
Thanks for visiting the FSA Learning Center! We'll keep you posted on all the FSA changes that may be coming in the foreseeable future, so be sure to to follow us on Facebook, Instagram and Twitter for the latest updates.
IRS opens up FSA mid-year changes due to COVID-19 crisis: What you need to know
With millions of Americans turning to their flexible spending account (FSA) dollars to cover the immediate costs of medical care and virus preparedness amidst the COVID-19 pandemic, a few very important FSA changes have emerged in recent months. The first was the CARES Act, which opened up over-the-counter (OTC) medicines and feminine care products to full FSA eligibility, while the second came this week as the IRS took a major step to open up mid-year FSA changes to account holders.
In the past, mid-year FSA changes were only allowed if the account holder experienced a qualifying life event, such as marriage, the birth of a child or a change in employment. Because of the public health crisis, this week the IRS provided two new notices that may provide additional flexibility for FSA users:
Notice 2020-29: This notice allows for mid-year changes for health plans including FSAs to allow employees to elect new health plan coverage or revoke existing coverage dating back to the beginning of the year. This means that account holders can choose to elect into or opt out of an existing FSA or increase or decrease a current FSA election. Here's the big thing to remember: this will only be available to account holders whose employers allow these mid-year changes.
It also allows for a possible extension of previously expired 2019 funds if an employer chooses. The Notice provides the option for employers to further extend FSA deadlines through the end of 2020 for 2019 plan years which had certain deadline extensions already in place.
What does this mean?
This is a big one in the history of FSAs. Account holders effectively have the opportunity to reduce their overall FSA contribution, or withdraw from their program if permitted by their employer and if they so choose. Conversely, those who aren't enrolled in an FSA and want to use this opportunity to save on expected healthcare costs, or up their contribution for 2020, have the ability to do so if their employer chooses to participate. Account holders should start by consulting their benefits administrator or HR department for more information on whether these changes will affect their accounts.
Notice 2020-33: This notice increases the maximum FSA carryover allowed from $500 to $550, if amended and allowed by the plan. Last year, President Trump signed an executive order directing the US Treasury to increase the FSA carryover amount. In response, the maximum carryover amount has been increased to $550.
What does this mean?
The $550 was indexed to inflation and represents 20% of the current total FSA allowed maximum for the year of $2,750 (the prior limit of $500 was 20% of the original FSA election limit of $2,500). When it comes to enacting these changes, employers may choose to allow up to $550 to carryover or a lesser amount if they choose. Carryovers are one of three deadline extension options which employers may or may not allow.
Once again, a good first step for account holders is to consult their benefits administrator or HR department to find out if a carryover will be available during their plan year and if so, what the maximum carryover amount will be.
What's next?
We'll keep you posted on all the FSA changes that may be coming in the foreseeable future, so be sure to to follow us on Facebook, Instagram and Twitter for the latest updates.Flex-Ed: 3 ways technology has simplified FSA management
Flexible spending accounts (FSAs) can be one of the mostly useful tools an employee can have. But historically, people have mistakenly viewed them as difficult to manage. Now, with connected technology around us at all times, FSAs are simple to manage and use, changing the way people view these accounts.
With open enrollment coming up, if you're on the fence about enrolling in an FSA because you think they're difficult to handle, check out all the ways tech has made it a breeze to stay on top of your funds.
FSA debit card
By far one of the biggest developments in the FSA world is the arrival of the FSA debit card. Traditionally, FSA expenses were paid for with the account holder's cash, check or credit card, and then these expenses were submitted for reimbursement to the FSA plan sponsor with the required documentation (receipts, invoices, etc.).
Most providers now issue FSA cards for account holders, which dramatically simplifies the claims process and makes it easier for you to pay for out-of-pocket health care costs. Just be sure to hold onto your receipts in case your administrator requires you to submit documentation.
FSA portals
Most FSA administrators offer 24/7 access to your FSA details through a dedicated FSA portal. Your FSA portal will typically allow you access to your account balance, the ability to submit and manage claims online, contact information, FAQs and much more. Before you start dialing your administrator, visit your portal (which are usually accompanied by a mobile app) to see if the answers you need are there. It's faster, easier and more efficient!
FSA educational tools
The crisis surrounding FSAs for decades was always a question of education - whether information was made available to workers and whether HR managers could answer in-depth questions related to FSA rules and regulations set forth by the IRS. That's why we launched this Learning Center -- because we know consumer education is one of the biggest stumbling blocks to FSA enrollment.
In addition to the articles on this page, we also have an entire suite of FSA tools to help you cover every angle of your account, including:
- FSA Eligibility List: The web's most comprehensive eligibility list detailing medical products/services and their eligibility with FSAs, HSAs and other consumer-directed health care accounts.
- FSA Calculator: We've created a way to calculate exactly how much FSA money you should set aside based on your income, marital status and state.
- FSA Tracker: Not all FSA plan years are the same, so make sure you stay on top of your deadline. Submit your FSA deadline in our tracker for email reminders sent to you when your deadline is around the corner.
Guaranteed FSA-eligible products!
Nothing is easier for FSA users than visiting a website and knowing each and every item is guaranteed-eligible. No confusion, no comparing sites, no guesswork. Just a growing collection of 4,000+ eligible health and wellness products, able to be purchased with an FSA card or regular credit card.
Kanjō Travel Acupressure Set
A simple yet effective at-home and on-the-go solution for neck, back and foot pain.
Battle Creek Migraine & Headache Deluxe Kit
Finally, a drug-free approach to headaches that can be personalized for the user.
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New to FSAs? Need a refresher course in all things flex spending? Our Flex-Ed column gives you a weekly dose of FSA Living 101, offering tips for making the most of your tax-free funds. Look for it every Thursday, exclusively on the FSAstore.com Learning Center.
Asked and Answered: Why do FSAs cover acupuncture but not other alternative pain treatments?
When it comes to flexible spending accounts (FSAs), you've probably heard about the tax breaks and benefits (not to mention being able to pay for health emergencies when they arise). But, what most people really want to know is what the term "eligible expenses" actually means.
This is especially true if you're having issues with pain, and you want to explore therapies like acupuncture or other types of alternative pain management.
So let's take a quick look at how FSAs classify acupuncture, as well as other alternative types of treatment, like the often confused acupressure, which is often also FSA-eligible. (See the differences in this post.)
FSAs and acupuncture
Acupuncture has been used in Asia for centuries to treat pain, but it's still a pretty new type of treatment here in the U.S.
Acupuncture is an eligible expense with an FSA because it's considered an approved treatment for pain. Even the IRS lists acupuncture as a qualifying medical expense that you can deduct on your annual tax return.
While acupuncture is FSA-eligible, you still may be required to get a Letter of Medical Necessity (LMN) that describes how acupuncture would help in the management of a diagnosis, cure, treatment, mitigation or prevention of a medical condition or disease.
Are there any other FSA-eligible alternative pain treatments?
Potentially. Each situation is unique and will likely be handled on a case-by-case basis by your FSA plan administrator. Two common alternative treatments for pain include:
- Naturopathy – non-invasive treatments that promote self-healing
- Chiropractic – manipulation of the spine to alleviate pain and discomfort
It's at your doctor's discretion whether these alternative types of therapies would be useful in your treatment plan. If they are, and the service aids in diagnosis, cure, mitigation, treatment or prevention of disease, an LMN must be written, which may make the service eligible for reimbursement under your FSA. In short, any natural therapy could be eligible if it hits these marks.
The LMN must provide detailed information about how the alternative treatment would be used as part of your treatment plan and what the treatment would cover and how long treatment should last.
Regardless, your best option is to discuss alternative therapies with your physician to determine if there's an opportunity to integrate these treatments into your pain management plan.
Get started with acupressure
Kanjō Memory acuPressure Mat Set with Pillow
A simple yet effective at-home solution for neck and back pain.
Kanjō Memory Foam Acupressure Neck Pillow
Targets acupressure points to reduce pain throughout the neck and shoulders.
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From FSA basics to the most specific account details, in our weekly Asked and Answered column, our team gets to the bottom of your most-pressing flex spending questions. It appears every Wednesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
Asked and Answered: Can I use my FSA for my child's eye care?
It's back-to-school time, and as you scramble to get your kids ready for the new academic year, there may be more to think about than just picking up school supplies.
This is because August is Children's Eye Health and Safety Month, sponsored by the American Academy of Ophthalmology (AAO). Each year, the organization aims to provides information to the public that can help protect and preserve your child's eye health.
Luckily, whether you have a standard flexible spending account (FSA) or a limited care flexible spending account (LCFSA), your benefits can cover a significant portion of vision care expenses that can help your child see clearly throughout the coming school year. Here are just a few of the AAO's suggestions of what you should cover as the calendar flips to September and school gets underway.
Vision exams
According to the American Optometric Association (AOA), an eye exam is recommended for school-aged children every two years if there is no vision correction issue present, and those who need glasses or contact lenses should visit on an annual basis.
Before your kids get back in the classroom this fall, make an appointment with your optometrist to ensure your child's eyesight is healthy - and use your FSA to offset the costs.
Eyeglasses/contact lenses
Another good plan is to make sure your kids have up-to-date glasses and contact lenses that can stand up to the rigors of childhood. Your FSA covers reading glasses, prescription eyeglasses and prescription contact lenses.
If your child's eye wear is in need of an update, your FSA can cover the fresh new look they've been looking for. Visit our Optical Store to browse our selection of leading eye care brands.
Are all types of contacts covered?
If contacts are designed to correct vision problems, they're FSA-eligible. Though insurance companies might have their own policies regarding coverage of specific types or brands of lenses, they're usually reimbursable with your tax-free funds. Plus, unlike some insurance providers, which may not cover contact lenses in place of eyeglasses, if the contacts are prescribed to correct vision they are eligible, regardless of insurance plan coverage.
Vision correction accessories
Are you running low on contact lens solution? Has your child misplaced a carrying case? In addition to vision correction methods, your FSA covers a huge slate of products that can protect and prolong the lifespan of your kids' eyeglasses and contact lenses. Contact lens solution, eyeglass repair kits, cleaning cloths and much more are eligible for FSA reimbursement.
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From FSA basics to the most specific account details, in our weekly Asked and Answered column, our team gets to the bottom of your most-pressing flex spending questions. It appears every Wednesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
Asked and Answered: Can I pay for fertility treatments with my FSA?
One of the benefits of an FSA is that you can use it for preventive treatments. But there are some health care needs that aren't easily classified as either health maintenance or preventative care, which makes it difficult to know whether they're eligible.
This "gray area" includes procedures like fertility treatments, which aren't covered under most standard insurance plans.
So the question we always hear is, "Are fertility treatments FSA-eligible?" The answer is "yes," but there are some exceptions, so it's important to understand what type of fertility treatments are covered, and what type of treatments aren't eligible under your FSA.
Fertility and FSA eligibility
Healthcare treatments eligible for FSA reimbursement must be services used to diagnose, evaluate, and/or treat injury, illness, disease or symptoms of a disease. While the inability to have a baby doesn't fit neatly into any of these categories, the IRS allows you or your qualified dependents to deduct medical expenses involving fertility in certain circumstances, including:
- In vitro fertilization (IVF), which is a process in which doctors remove eggs from the ovary, fertilize the eggs in a lab, and place the embryos into the uterus
- Intrauterine insemination (IUI), in which sperm is inserted into the uterus and is timed with a woman's ovulation to increase the chances of conception
- Surgery to implant donor eggs and embryos. This also includes any procedure that reverses a prior surgery that prevents a woman from conceiving a child.
- Fertility medications such as follicle-stimulating hormone (FSH), which help ovaries produce more eggs
- The cost for temporary storage of eggs or sperm
FSA reimbursement for these treatments and services may require specific documentation and not all circumstances will qualify for reimbursement, so you'll want to speak with your FSA administrator to see exactly what you'll need when using your card or submitting your claim.
There are the major treatments and procedures that your FSA will cover to correct fertility issues preventing you from having a child. And there are some things you should be aware of, especially involving the tests that doctors use to determine appropriate treatments for a woman struggling to conceive.
The IRS doesn't specifically include fertility testing under the umbrella of medical procedures, but many FSAs allow you to treat fertility tests as diagnostic services similar to those used to treat other types of illnesses and diseases.
Again, it's best to check with your FSA administrator if you have any questions about whether or not a specific fertility treatment is covered under your plan.
Fertility expenses that aren't covered by your FSA
Although your FSA will reimburse you for many major types of fertility treatments and procedures, it won't cover any expenses you incur if you use a surrogate for the IVF procedure as your surrogate would not be a qualified dependent under your plan.
And any expenses related to the long-term storage (greater than one year) of eggs and sperm are not considered part of an immediate medical need to conceive, and also aren't covered under your FSA.
But if you are struggling with fertility issues, your tax-free funds let you pay for many treatments that can help you achieve your dream of having a child. Let your FSA ease your mind so you can focus on a healthy, happy pregnancy, and check out our growing lineup of family planning and fertility products, to make this journey as easy and enjoyable as it can be.
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From FSA basics to the most specific account details, in our weekly Asked and Answered column, our team gets to the bottom of your most-pressing flex spending questions. It appears every Wednesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
Real Money: Smart FSA spending for diabetes needs
No doubt that diabetes is expensive. Between appointments, getting equipment and purchasing healthier food that doesn't raise your blood sugar, it can be hard to squeeze all that out of your budget. But, paying for these necessities doesn't have to be such a burden. If you take advantage of your FSA and manage it right, you can offset costs.
Here are some smart (and eligible) ways to reduce the costs of your current diabetes routine.
Estimate how much you'll need each month
Estimating the amount you'll be spending will help to figure out how much to put into your FSA account. It'll help to lessen the chances of money being left over at the end of the year. If your employer makes contributions to your FSA and you don't use it all, that free money is sadly gone too (with some limited exceptions).
First, determine what kind of diabetes equipment you can purchase with an FSA. These can include test strips, blood glucose monitors, diabetic socks and lancets to name just a few. You can then try to estimate how much you'll need every month and set aside your pre-tax dollars that way. If you can and if applicable to your FSA, factor in exactly how much your employer contributes so you can add that in your budget.
Take advantage of discounts
You can essentially purchase FSA-eligible items or services anywhere, so why not stretch those dollars? You don't have to stick to your local area to scour for deals. Look online and you could find not only discounted prices, but also digital coupons. Some places even offer promotions for first time customers so try to take advantage of those. (We may know of one…)
Before going crazy and buying up everything in sight, check to see what the shipping costs are. While the supplies itself may be cheap, some places could charge you shipping which negates the discounts.
Upgrade equipment each year
Remember, your FSA money is technically use it or lose it. In other words, whatever you contribute can only be used in that plan year. Sure, you may have a rollover option, but you can only move up to $500 to next year's balance if you do.
If you have a chunk of money at the end of year, consider upgrading any equipment then. It's smart to want to hold out on purchasing any expensive items until necessary, but not spending FSA funds is a big waste. Of course, you can always buy supplies instead of getting new equipment.
Factor in your HSA
If you tend to spend more than $2,700 (the maximum amount you can contribute to an FSA in 2019) each year on diabetic supplies, consider taking advantage of an HSA-qualified plan at open enrollment. HSAs come with higher limits for contributions, but you are only eligible to also participate in an HSA in if you happen to have a limited-purpose FSA -- you typically can't have an FSA and HSA at the same time.
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Despite the restrictions of when you can spend your money, FSAs are a great way to save money by not paying taxes on diabetes supplies. But, buying diabetes supplies is just one example of how you can offset your expected healthcare costs with tax-free funds. If you know you're going to need health and wellness products, check our extensive Eligibility List to see if your needs are covered by your FSA.
Blood Glucose Monitor
Know your blood sugar level in seconds with simple and easy-to-use blood glucose monitors.
Diabetes Supplies
From lancets to test strips to glucose tablets, keep your blood sugar in your control with a wide range of diabetes supplies.
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Whether you budget week-to-week, or plan to use your FSA for bigger things, our weekly Real Money column will help you maximize your flex spending dollars. Look for it every Tuesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
Asked and Answered: Are summer day camps FSA-eligible?
Yes, it can. Under IRS guidelines, you can send a child to a day camp as a work-related expense with a dependent care FSA (DCFSA). We don't spend a lot of time covering dependent care FSAs on these pages, but summer is always a good time to see if this type of account is right for your family. Why? Because summer day camp is an eligible expense for dependent care FSA holders!
It seems strange to be thinking about cookouts and and camp songs on a site built around health and financial wellness, but the dependent care FSA is a great way for people to set aside tax-free money toward any relevant costs -- including day care and camp. And it looks like the warm weather has the media thinking about these things, too, based on the headlined below.
How can a DCFSA help pay for day camp?
To use a dependent care FSA for reimbursement on day camp, children have to be younger than 13 years old. They must also be claimed as dependents on the federal income tax return. You are allowed to contribute $5,000 a year to a DCFSA per household, or $2,500 for married couples who file separately. The activity the camp specializes in does not matter as far as eligibility is concerned (whether it is sports-oriented, for example).
Other eligible expenses include:
- Babysitting (work-related whether in your home or outside the home, can be done by a relative not listed as a tax dependent.)
- Before- or after-school programs
- Child care or sick-child care while you work
- Nursery school, nanny fees, or preschool.
- Expenses for a housekeeper who takes care of a child.
Non-eligible expenses:
- Overnight camps do not quality as a work-related expenses
- Day care for a child 13 or older
- Summer school
- Kindergarten or school tuition
- Meals
The importance of day camp for children
A recent study by the RAND Corporation, a nonprofit, global policy firm, shows that voluntary summer programs like day camp have a significant, positive impact on low-income students during a time when they fall behind their wealthier peers both academically and socially. Their research also shows that children benefit from learning social and behavioral skills in different settings with new peers.
The problem comes from accessibility and cost. Many parents looking for assistance during the summer may not realize there are programs available to them to offset these expenses. There may still be time to make this happen for the 2019 summer season. But if you miss out now, this is the perfect time to start planning for summer day camp expenses for 2020.
Plan now for next year's day camp expenses
While you might not be thinking about s'mores when open enrollment starts, there are some significant savings to be had by planning ahead for the following year. But if you're planning and saving for future expenses, chances are you needed to make that decision at open enrollment the previous year.
Camp and other summer child care costs can be a big line item for working parents. Though prices vary, summer day camp programs accredited by the American Camp Association average $314 per week. Using a dependent care FSA can help parents save an average of 30% on these services, while also reducing your overall tax burden.
Sunscreen for Kids
Protect children from harmful UVA/UVB rays with kids sunscreen.
Band-Aids
Protect minor cuts and scrapes with fun Band-Aids.
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From FSA basics to the most specific account details, in our weekly Asked and Answered column, our team gets to the bottom of your most-pressing flex spending questions. It appears every Wednesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram, YouTube and Twitter.
Asked and Answered: What's your FSA contribution "magic number?"
Figuring out how much to contribute to your FSA is a bit like deciding how much food to bring on a backpacking trip. Once you get out in the wilderness, you're stuck with the rations you've brought - if you packed too much, you may have to toss it along the way. If you packed too little, you'll have to end the trip early.
Because you can't change FSA contributions mid-year unless you have a qualifying event, like changes in marital or work status, it pays to contribute the right amount. Contribute too little and you may end up with some hefty out-of-pocket expenses.
Contribute too much and you'll be faced with a dilemma - roll over up to $500 to the next year or try to spend the remaining balance in the first two and a half months. Everyone has a magic number for how much they should contribute to their FSA. Here's one way to find yours.
Go through last year's expenses
The best way to decide how much to save for health care expenses is to look at how much you spent the previous year. Log on to your insurance account and see if you can find the total amount you paid, not including monthly premiums.
Include how much you spent for all medical expenses, such as glasses and contacts, prescriptions, counseling and therapy visits, medical devices, dental visits and more. Then, examine those expenses and determine how common they were. If your only visits to the doctor were because of ordinary problems like the flu or sinus infection, you can probably estimate this next year will be the same.
If you ran into a major health problem, you should evaluate if next year will be similar. Some issues, like diabetes or asthma, require more-frequent doctors' visits. Others, like appendicitis, happen once a lifetime.
If you had a costly medical emergency, consider the likelihood that it will occur again and whether or not to include that figure in your estimate.
Compare health insurance plans
Even if you're signing up for a similar health insurance policy, the deductibles, copays and coinsurance rates might change from year to year. Compare the figures to see if you'll be paying more and adjust your FSA contribution accordingly.
For example, if your health insurance copay is increasing from $40 a visit to $60, add up how many visits you made last year and multiply them by $20.
Think ahead about major procedures
Sometimes you know about major operations and procedures ahead of time, so you can plan ahead. If you know this is the year when you're going to get LASIK surgery or finally get your knees replaced, call the insurance company to get an estimate of those costs.
Most of the time you can get an accurate idea of the expenses you're facing. If the insurance company can only guess what your costs might be, go with the higher end of the estimate. This way, you'll be covered in case you end up paying more.
What if you picked the wrong number?
If you end up saving more than you needed, ask your HR rep about the company's rollover policy. Most will either let you roll over $500 or give you a grace period of 2.5 months to spend the remainder. If you saved too little, try upping your contributions next year to maximize your tax-free benefits.
Finding your FSA magic number is essentially, a guessing game. Don't be surprised if you estimate too much or too little the first time you do it. It's all about taking charge of your finances and making the most educated guess possible.
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From FSA basics to the most specific account details, in our weekly Asked and Answered column, our team gets to the bottom of your most-pressing flex spending questions. It appears every Wednesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram, YouTube and Twitter.
That's Eligible?! Real answers to common FSA eligibility questions
With new deadline extensions in place, thousands of eligible products available for purchase, and the freedom to use an FSA card, flexible spending accounts are easier than ever to use. We've seen a little bit of everything since we founded our company in 2010, but year after year there are still common questions on the minds of FSA holders.
So, once and for all, we're tackling the three most common eligibility questions we receive from FSA users. Whether you're an HR professional or an account holder, you can be armed with the knowledge necessary to take full advantage of your tax-free funds.
"Why do I need to get a prescription for items like Advil or Tylenol that I can buy without one in a pharmacy?"
New visitors to our site may think that we're putting FSA users through the ringer to purchase over-the-counter (OTC) medicines, but in reality, we are simply complying with rules put into place through the Patient Protection and Affordable Care Act (PPACA).
The provision requires FSA users to submit prescriptions for any OTC products that have a medicated ingredient like Advil or Claritin to obtain reimbursement. Our team continues to support the repeal of this provision, but until that happens, we can help you navigate this requirement.
First, FSA users should be mindful of any upcoming OTC medicine purchases they may need to make in the coming months, and pick up prescriptions during routine doctor office visits. If you don't have an appointment on the horizon, we created the Prescription Process to help.
Simply provide your physician's name, phone number and address and we will obtain the documentation necessary for you to make your purchase.
Update: As of March 2020 with the passage of the CARES Act, the OTC Rx requirement has been repealed and prescriptions are no longer necessary to purchase over-the-counter medicines with an FSA or HSA. Additionally, menstrual care products like tampons and pads are fully FSA-/HSA-eligible. Learn more here.
"So, diapers aren't FSA-eligible, but toddler training pants are?"
This is a common point of confusion for FSA users as it would seem that these two products perform the same function. As is often the case, diapers are considered "general health" items by the IRS. In short, diapers are used after a healthy function of the body, therefore it has no medical purpose.
However, toddler and young child training pants are eligible because they protect against bed-wetting, an involuntary function of the body. Training pants are commonly used in treatment plans for bed-wetting to help kids develop nighttime bladder control.
"Do I have to wait to spend my FSA funds until they accrue?"
FSAs are funded through regular payroll deductions from an account holder's paycheck over the course of the year - tax-free! This has the benefit of reducing your taxable income and helping you pay less in taxes. But for many who are on the fence about an FSA, how these payroll deductions take place can be a point of confusion.
But the solution is actually quite simple: an account holder's FSA contribution (which they elect during their open enrollment period) is available in full at the beginning of their plan year. So if you elected the maximum for 2020 ($2,750), that full amount would be available to spend on qualifying items and services from the start of the plan year.
Claritin Non-Drowsy Allergy Relief
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Motrin Ibuprofen Pain Reliever
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GoodNites Underwear
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Tranquility Adult Disposable Underwear
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Don't waste time hunting for ways to spend your tax-free funds. In That's Eligible?!, we'll bring you these updates every Monday, so you don't have to. And for all things flex spending, be sure to check out the rest of our Learning Center, and follow us on Facebook, Instagram and Twitter.
Flex-Ed: What you need to know about FSAs and job changes
Leaving a job—whether it's on good or bad terms—can be overwhelming. There are projects to finish, a final paycheck to collect, and health insurance coverage to change. That's why it's important to remember that your flexible spending account (FSA) can help you through the transition. But the chief question on most FSA users' minds when this occurs is: What happens to your FSA when you switch jobs?
FSAs are employer-sponsored spending accounts that allow employees to contribute tax-free money toward a wide variety of health-related expenses. But the "employer-sponsored" part is key, since your FSA requires you to have a job to maintain the account. If you have an FSA when changing jobs, the following checklist can help you navigate the transition like a pro.
Your FSA job change checklist
There's a lot to remember when it comes to your FSA during a job change. Here's what an easy to remember everything you'll want to keep in mind:
- Check your FSA balance.
- Spend any remaining money prior to your last day at the company.
- Submit all reimbursement claims to Human Resources prior to your last day at the company.
Now, the fine print
It's rarely fun to read the details, but when it comes to your FSA, you might be in for a pleasant surprise. Here's how it works—during open enrollment (or when you get hired) you can choose to contribute money to your FSA. This is completely optional, but there are a couple unique rules to note:
- The maximum you can contribute is $2,750 for 2020. Remember that an equal amount will be taken out every paycheck depending on your contribution!
- Even though you contribute to the account throughout the year, the full amount is available to use at the beginning of the year!
A reminder about "use it or lose it"
If you've visited our Learning Center, you know your FSA money is "use it or lose it." In other words, if you don't spend the money in the account by the end of your deadline, you forfeit the cash (though some account holders have deadline extensions, and the possible $500 rollover -- more on that later.). This is crucial to remember if you're switching jobs, because unlike retirement accounts, you cannot roll the money into a new account.
However, you can elect to start a new account with your new employer, even if it's within the same year. Note that your maximum contribution resets when you start a new job.
There are a few exceptions to the "use it or lose it" rule, but for job changes, the rule applies. If you do not use the money in your FSA, you'll lose it. Because of this, it's important to spend the money and file reimbursement claims prior to changing jobs.
(In other words, it's time to shop for FSA-eligible items!)
Uniform coverage rule
It might seem like the "use it or lose it" rule benefits employers, and in a sense it does. If the money in your FSA isn't spent by the end of the year, employers get to keep it (although it can only be used in specified ways, such as towards the cost of administering the FSA program). But there's a lesser known rule that benefits employees: the uniform coverage rule.
The uniform coverage rule does not allow employers to charge employees reimbursement if they spend more money from the FSA than they contributed.
For example, if an employee chooses to contribute a total of $1,000 to his or her FSA, the full amount ($1,000) will be available for the employee to spend at the beginning of the year. However, the employee will only have $83.33 deducted from his or her monthly paycheck.
So, if an employee leaves a job in February, when she or he contributed $83.33 to the account, the employee can technically still spend the full $1,000 without penalty or being forced to provide reimbursement to the employer. Having said that, the employee would still need to file claims for the purchases before leaving the job.
Now, we're certainly not recommending employees take advantage of their employers' contributions to a company FSA program through the uniform coverage rule. However, this rule stands as a potential benefit for those who are forced to change jobs due to an unexpected life change, or layoffs.
This can offer relief for pressing health concerns—new glasses, appointments, prescriptions—that don't go away because of employment changes.
Enjoy your final day at your job (be sure to submit reimbursement claims before you leave the office though!) and feel good knowing that you didn't leave any of your hard-earned money behind.
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New to FSAs? Need a refresher course in all things flex spending? Our weekly Flex-Ed column gives you a weekly dose of FSA Living 101, offering tips for making the most of your tax-free funds. Look for it every Thursday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
Real Money: Self-employed contractors, FSAs and parenting
There's no doubt that the gig economy is growing. About 11% of U.S. workers are full-time contractors, according to Nation1099. Freelancers are also on the rise. Popular freelancing platform Upwork's report that 57.3 million people in the U.S. freelance full time.
And one of the reasons for this steady surge toward home-based employment? Parenting and child care, and the ability to make your own hours to accommodate for a growing family's always-hectic schedule.
A quick note on freelancing vs. contracting
A few weeks ago, we discussed the availability of FSAs to freelancers. But there's an important distinction to be made between freelancers and contractors. Freelancers work for themselves, often doing work for various clients simultaneously. A contractor usually has a signed contract with one client to perform a specific role for a set period of time.
If you're a contracted worker, chances are, you enjoy the freedom that comes along with working when you want, where you want, or even moving on when the work no longer interests you.
Let's start with the answer you want
Unfortunately, the IRS says that self-employed workers aren't eligible for FSAs. I know, that hurts a bit. If you have a spouse that's eligible for an FSA through their employer, they should consider opening one, since you and any dependent children are also eligible to use those funds.
There are other options (especially if you have children)
There's good news for those with children: If your spouse can give you access to an FSA, you can use your FSA to pay for approved over-the-counter medical items like contact lens solution, nasal spray, breast pumps and accessories, and even copays. Items containing an active medical ingredient like acne medication, sleep aids, and allergy medication are also eligible with a valid prescription.
You can also consider a dependent care FSA, which can be used to pay for childcare for a child 12 and younger. Specifically, summer camps, preschool tuition, and daycare to name a few.
Finally, you might want to consider opening an HSA if you're self-employed and currently enrolled in a high deductible health plan (HDHP). HSAs are similar to FSAs in that they cover medical expenses like OTC medicine, prescriptions, and copays.
Worth noting: Generally, you can't have both an HSA and an FSA (with limited exceptions).
The child tax credit (CTC) and the additional child tax credit (ACTC) can also help offset the cost of childcare. These tax credits are up to $1,000 per qualifying child. The child must be under 17, have lived with you for at least half of the tax year, and be a U.S. citizen.
Worth noting: If you feel you have been improperly classified as an independent contractor and should be an employee, you may be eligible to change your status with your employer and gain access to benefits like an FSA.)
So be sure to explore your tax advantaged options when it comes to defraying the cost of childcare. Because let's face it: Even home-based workers need a little help sometimes.
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Whether you budget week-to-week, or plan to use your FSA for bigger things, our weekly Real Money column will help you maximize your flex spending dollars. Look for it every Tuesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
What is the shelf life of my sunscreen?
Summer's here, and that means long days, plenty of sunshine and the opportunity to enjoy the great outdoors with your loved ones. As you prep for the many adventures ahead, sun protection should be at the top of your list of priorities. But before you reach for that dusty bottle of sunscreen you stored last fall, it may be wise to check the expiration date first!
Is last year's sunscreen still effective?
First and foremost, the best indicator of the current state of your old sunscreen is to look at the expiration date. According to the Skin Cancer Foundation, to test shelf life, manufacturers store a product at 40°C with 75 percent humidity; then at 40°C with 25 percent humidity; and then test it at 0, 1, 2 and 3 months.
Stability for three months in these laboratory conditions is comparable to three years in normal environments. In the vast majority of cases, you can reliably expect your sunscreen to last at least 3 years from the date you purchased it and the expiration date is a reliable indicator of its effectiveness.
In addition to the importance of the expiration date, you should also be mindful of the look and feel of the sunscreen to ensure that it hasn't broken down from one season to the next. The Mayo Clinic advises individuals and families to avoid previously-used sunscreens that may have obvious changes in color or consistency, as they may have lost their efficacy over time.
Where should I store my sunscreen?
At the end of each summer, most sunscreen is tucked away underneath the bathroom sink or stored in a closet, which may not be the best location for extending their shelf life. According to Drugs.com, sunscreen should be stored at room temperature, between 59 and 86 degrees Fahrenheit. Additionally, it should be kept in a dark space to prevent light from causing the ingredients to separate.
So, in most cases, the fluctuating temperature and humidity levels of bathrooms are not the ideal spots for storing sunscreen, so stick with the dark, room temperature closet, instead.
Neutrogena Beach Defense Sunscreen
Protect yourself from harmful UVA/UVB rays in the water and the sun with this sunscreen spray.
Coppertone Kids Sunscreen
This sunscreen has 80 minutes of water resistance, and stays on strong when kids play.
How to pick the perfect FSA-eligible baby sunscreen
As a new mom or dad, you have a laundry list of infant health issues to be concerned with, but now that we're in the dog days of summer, sun care is likely at the top of your list of priorities. Sunburn is especially dangerous for a child's skin, and the Skin Cancer Foundation reports that suffering one or more blistering sunburns in childhood or adolescence more than doubles a person's chances of developing potentially-deadly melanoma later in life.
This risk is especially acute in infants, as babies younger than 6 months old should never be in direct sunlight, while infants 6 months and older must be well-protected with sunscreen when outdoors, according to The Mayo Clinic. But how can you pick the ideal sunscreen for your little one? Here are a few key features to look for when shopping for FSA-eligible baby sunscreen.
- Broad spectrum protection
On each bottle of sunscreen there are two important pieces of information to look out for. First, the product is most effective if it offers broad-spectrum protection against UVA and UVB rays, which are the primary causes of sun damage. Additionally, the product's sun protection factor (SPF) is significant as well.
The Mayo Clinic suggests that baby sunscreen should be at least SPF 15 to provide an adequate level of protection against the sun's rays (and if using your FSA to purchase the sunscreen, only those that are SPF 15+ will qualify as eligible).
- Chemical-free sunscreens
Chemical-free sunscreens are the better choice for baby sunscreen for two very important reasons. First and foremost, if ingredients in a chemical sunscreen run due to sweat or another form of moisture, they could sting the baby's eyes or could even cause a skin reaction.
Chemical-free sunscreens typically contain active ingredients like zinc oxide and titanium oxide, and BabyCenter reports that these products have the added benefit of being active from the second they are rubbed onto the skin, as opposed to chemical sunscreens that may need 15-30 minutes to become active.
Now, refine your sun care routine!
When you've found the perfect baby sunscreen, it's important to remember that an infant's skin burns very easily, so you'll need to practice additional sun safety measures. These include:
- Seek the shade: Whenever possible, make an effort to keep your baby in the shade to ensure that he/she will not receive direct sunlight for the majority of your time outdoors.
- Avoid peak sun hours: According to The Skin Cancer Foundation, UV rays are at their most intense levels between 10 a.m. and 4 p.m., so re-apply sunscreen generously during these hours or keep your outdoor time reserved for the early morning and evening when the sun is not its strongest.
- Invest in sun-protective clothing: In addition to using baby sunscreen, there are a number of great sun protective clothing items that can protect your infant's skin. Tightly-woven or knit clothing, hats and dark/brightly colored clothing offer the best possible protection from the sun.
For everything you need to keep your family healthy year-round, you can rely on FSAstore.com! We have the web's largest selection of FSA-eligible products to help you maximize the potential of your employee benefits.
Sunscreen
With powerful UVA/UVB protection, stay out of harm's way with a wide variety of FSA-eligible sunscreens.
Water-Resistant Sunscreen
Stay protected in and out of the water with water-resistant sunscreen spray.
Sources:
http://www.skincancer.org/media-and-press/press-release-2013/kids
http://www.skincancer.org/prevention/sun-protection/sunscreen/choosing
https://www.babycenter.com/404_what-kind-of-sunscreen-is-best-for-children_12504.bc
