Make Some Resolutions
Start With Spending Your FSA Dollars Before They Disappear
As the end of the year nears — can you believe it? — many people’s thoughts turn to celebrating the holidays by exchanging gifts, visiting family, and eating and drinking a bit more than normal. All that festivity is fine, but there are also some year-end deadlines to be aware of, and one of the most important is using your Flexible Spending Account (FSA) dollars before you lose them.
Generally, you must use the money in your FSA within the plan year, with two exceptions. Your employer can provide a “grace period” of up to 2.5 extra months or it can allow you to carry over up to $500 to use in the following year. It is not obligated to do either, and if it doesn’t, you must spend the money in your account by December 31 or you’ll lose it.
As you might know, FSAs are limited to $2,650 per year per employer, and you can use the funds to pay for certain medical and dental expenses for you, your spouse, and your dependents. This includes:
- Paying deductibles and copayments — but not insurance premiums
- Paying for prescription medications as well as over-the-counter medicines with a doctor’s prescription
- Paying for medical equipment like crutches, supplies like bandages and diagnostic devices like blood sugar test kits
It’s important to plan carefully and not put more money in your FSA than you think you’ll spend within a year on allowed healthcare costs. While you don’t pay taxes on the money in your FSA, you want to make sure those funds get used, not lost, when a new year begins.
In addition to resolving to use your FSA dollars before December 31 and being smart about how much money you designate for your FSA account next year, you may want to consider making other resolutions for 2019. Common New Year’s resolutions include quitting smoking, losing weight, saving more money, and eating better, but why not go outside the box and make resolutions like learning how to salsa dance, adopting a dog or cat, volunteering or giving more to charity, and donating items around your house that have outlived their usefulness for you — but may be helpful to someone else.
Happy New Year!