More Time to Use It Before You Lose It

Hi, Gail-
I have a "Flexible Spending Account" at work. I seem to recall that they've changed the rules so you have more time to get your claims in.

What can you tell me?
Thanks,
Shawn

Dear Shawn-
You are correct: Last year the IRS came out with a more flexible rule for spending the money in Flexible Spending Accounts, or FSAs.

If your employer adopted the new deadline for using your contributions, you may have up until March 15 to submit claims for the money you set aside in your FSA account last year.

FSA ABCs
First, a bit of background. A Flexible Spending Account is an employee benefit that allows you to pay out-of-pocket medical expenses with pre-tax money. If your employer offers an FSA, you have to decide before the start of the new year (generally this takes place around November) how much money you want deducted from your paycheck. Whenever you pay medical bills, or have health-related expenses not covered by insurance, you submit a claim to your FSA provider and get reimbursed from the money you've set aside.

The problem is, an FSA is a "use-it-or-lose-it" proposition. You either have 12 months or, under the new rules, 12 plus 2½ months to use the money in your account. Anything left is forfeited. This is what makes people reluctant to take advantage of these accounts. How can you possibly know in advance what you'll be spending on healthcare in the next year?

It Adds Up
Actually, it's easier than you think. Got kids? If any of them need braces, you can factor that into your FSA estimation. Will anyone in your family be getting new glasses or needing contact lenses? If your health insurance doesn't include vision expenses, you can plan to pay for these with FSA money. You can also reimburse yourself for any co-payments you have to make to doctors or for prescriptions.

What many people don't realize is that FSA money can also be used for a host of other expenses you wouldn't necessarily think would qualify. These include non-prescription, i.e. over-the-counter, medications such as aspirin, cough medicine, antacids, etc. If you join a weight-loss program such as WeightWatchers on your doctor's advice, you can use your FSA account to pay your weekly fee. (Note: Be sure you have a written recommendation from your doctor.) There's also a good chance your plan covers tutoring for a learning-disabled child.

Are you stressed out by your job or struggling with a drug or alcohol problem? Counseling can also qualify as an FSA expense. (Check with your plan to see if marital counseling is covered.) Lasik surgery to correct near-sightedness is also a qualifying medical expense. So are canes and wheelchairs, although if you submit a claim for a motorized wheelchair you're "pushing it," according to Bonnie Whyte, president of the Employers Council on Flexible Compensation.

Don't Be Ridiculous
But FSA providers draw the line when it comes to expenses that are not medically necessary. So don't even think about using FSA money to cover your Botox injections or any other cosmetic treatment. (And, no, it doesn't matter that your teeth-bleaching was performed by a dentist.)

Got Defibrillator?
Having your own personal Defibrillator might seem like something that's off the chart, but, surprisingly, some FSAs are covering it. "You can't just buy stuff just because you want it. But if you've had a heart attack and can make a case for it to the plan administrator" it just might be approved, says Whyte.

Massage? Hot Tub? Maybe
While she admits it's rare, Whyte has seen cases where individuals have even been able to justify paying for massages with FSA money. Hot tubs are also not out of the question. The key is whether you can successfully argue that it's a medically necessary expense. (Sorry to sound like a broken record.)

You can get a good idea of the kinds of expenses that qualify for FSA reimbursement by checking out IRS Publications #502 and #503 (find them at www.irs.gov).

If you've got an FSA account, call your plan administrator to see if you have any balance left and whether your plan has adopted the extended deadline. If so, you've still got a little time before you "lose it." So schedule that eye exam, buy those new prescription sunglasses and head to the drug store and load up on milk of magnesia, aspirin and hay fever medicine!

Just remember to submit your claim within the time specified by your FSA provider.

Hope this helps,
Gail

If you have a question for Gail Buckner and the Your $ Matters column, send them to: yourmoneymatters@gmail.com , along with your name and phone number.