The Wisest Ways To Spend Your FSA Dollars By The March 15 Deadline
No one likes to throw away money. However, if you have funds remaining in your Flexible Spending Account (FSA) for 2017, you may just be doing that. The FSA is a “use it or lose plan,” meaning if you don’t spend all the money by year-end, you could forfeit it all. The “grace period” deadline for submitting receipts and getting your money is March 15, so plan accordingly!
If you’ve never fully understood what an FSA is all about, here’s how it works:
Your employer sets aside money from your paycheck before taxes are taken out. You can then use these pre-tax FSA dollars to pay for eligible expenses such as medical or dependent care throughout the plan year that is not covered by your insurance.
What’s the difference between an FSA and an HSA?
An FSA is typically funded by a pre-tax payroll deduction, but employees can also contribute. You can use this money in conjunction with any type of health insurance, although health insurance coverage is not required to open an account. If you use your full contributed amount and then quit or are terminated before year-end, FSA funds do not have to be paid back to the employer.
Depending on the extent of your health costs, an FSA can save you a lot of money (to the tune about 30%). However, if you deposit more than you’ll need for medical care, it can backfire: The money gets absorbed back into your company’s fund if not used. Employers are allowed to roll over up to $500 to the following year, but If there’s more than that in your account, the money needs to be spent before that March 15 deadline. Employers can offer either option, but not both.
An HSA (Health Savings Account) requires you be enrolled in an HSA-qualified high deductible health plan (HDHP) in order to sign up and to make contributions. HSA money does not expire and can be used without being taxed for qualified medical expenses at any time in the future, even if the person is no longer covered by an HDHP.
Both an FSA and HSA will pay off when it comes to your taxes. For example, If you make $2,000 a month and designate $100 a month to your account, you are taxed as if your income were $1,900 for the month.
What Can You Use Your FSA Dollars for?
While you can’t use your FSA for insurance premiums, you can use it for doctor visit copays, coinsurance, deductibles, prescription medications, medical equipment, some OTC items, and medical expenses that are not covered by insurance. You can also use your money to pay for licensed dependent care. There’s even a website called FSAstore.com, and every item for sale is covered by FSA plans. For a complete list of covered expenses, be sure to ask your employer for documentation before you make costly assumptions, and be sure to save your receipts!
What’s the Best Investment for your FSA Money?
Optical and dental expenses are two of the best investments to spend your FSA dollars on. Medical insurance rarely covers the whole cost of many optical and dental visits, procedures, or products. This can be very pricey out of pocket - which makes using your pre-tax money a smart way to cut those expenses.
For those of you who have been needing (or coveting) a new pair of RX eyeglasses or sunglasses but stumbled over the price tag, the good news is these funds can be used on optical purchases, not just exams! They can even be applied to LASIK surgery.
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If you’re sight challenged but not a fan of surgery, take advantage of the thousands of options available at ACLens. ACLens has top brands and styles with an incredible selection of stunning frame colors, shapes, and lens gradients to fit your unique face and budget.
Got questions or concerns about ordering prescription glasses online? No worries. There is extensive customer service available as well as live chat so that you’ll get the right fit for your prescription. The best part? They respect your hard-earned cash. Shipping is free on purchases over $99, and If your glasses don’t suit you for any reason, you will be issued a full refund - no questions asked. There’s no risk in trying a new look, especially when it’s covered with that flex spending account pre-tax dollars!