The 7 Surprising Expenses That Are Covered by Your FSA
You can set aside money in a flexible spending account (FSA), often called a flexible spending arrangement, to cover certain out-of-pocket medical expenses.
Payroll deductions contribute to your FSA all through the year, and you can utilize the money for qualified medical, child care, and transportation costs. There's still a chance you'll have some cash on hand come December. This money is usually lost unless it is used for eligible FSA purchases. If you've been putting off dental work, now is a good time to get it done.
If you have an FSA, you can buy commonplace necessities from stores like Target and Amazon. There is a broad and varied list of products and services that qualify for payment from a flexible spending account.
You may be surprised to learn that FSA doesn't cover all of the things we've listed below. If you have any questions regarding whether or not a given item is deductible, you can consult the IRS website, your pharmacy, or your doctor.
The FSA: How It Operates
A Flexible Spending Account (FSA) is a savings vehicle for medical expenses. Your company may provide you with FSA options. In order to cover the expenses of prescription medicines, copayments, and deductibles associated with your employer-provided health insurance, flexible spending accounts (FSAs) can be used. The IRS allows you to keep more of the money you earn by contributing to a flexible spending account.
Money put into an FSA is deducted from your paycheck before taxes are taken out. Your contributions to your FSA are tax-free. Therefore, you'll avoid losing an amount equal to the taxes you would have paid on the sum you put aside. There is the potential for significant cost savings by adopting this strategy. With a tax rate of 30% on an annual income of $50,000, TurboTax projects that contribute $ 2,000 to an FSA account will result in savings of $650.
You are required to withdraw your FSA funds during the plan year. Nonetheless, your company can provide you with one of two alternatives:
As much as two and a half extra months may be added to your FSA's grace period.
You may roll over up to $610 every year for use the following year.
Only one of these choices can be provided by your employer. Neither one is mandatory for businesses to provide.
Any remaining funds in your FSA at the end of the year or the grace period will be forfeited. You shouldn't put more money into your FSA than you expect to spend on eligible medical expenses in a year, such as deductibles, copays, and prescription medicines.
At the end of the year, most people will have some money left over in their FSA, and they may be unsure of what to do with it. We've compiled a list of some great ways you may put your FSA funds to good use below. If you or a member of your family is in need of a certain medical item, you should either check the full list on the IRS website or inquire with your pharmacy or doctor.
However, before heading to the register, double-check that you may use your FSA card to purchase the items you need, as some of them do require a doctor's prescription.
Child and Infant Care
There are several factors essential to the well-being of infants and young children. Fortunately, a wide range of infant and childcare items can be paid for with FSA funds. Products as common as they are uncommon are included here:
Sunblock
Multivitamins
Gum-based baby monitors
You can buy a breast pump, nursing equipment, and other postpartum necessities like a delivery wrap with your FSA funds if you are a new mom.
Cosmetic Dentistry
One of the best things about having an FSA is that you may use the money in it to pay for dental work. When it comes to dental care, FSA funds can be used for both copayments and other out-of-pocket costs. Everything from checkups to fillings to crowns to gum surgery is included under this. Prior to undergoing any dental work that might be covered by an FSA, you should verify with your dentist to make sure.
Please exercise caution when purchasing dental goods. Toothbrushes, toothpaste, and dental floss are not eligible for purchases with your FSA account. However, items like sporting mouthguards and denture retainer cleaners can be found in the FSA online store.
Eye Health
It's not only for teeth; you may use your FSA funds for eye treatment as well. Contact lenses, eyeglasses, and contact lens accessories like cleaning solutions and cases can all be purchased using FSA money. The cost of prescription eyewear will be paid. Depending on the optician, you may be required to make an initial payment before being reimbursed.
Products for Women's Hygiene
With the passage of the CARES Act in 2020, you can now use your FSA to pay for feminine hygiene products.
As a result, you can now utilize your Flexible Spending Account funds to purchase period products including pads, tampons, liners, and even underwear. Menstrual cups and other alternatives are also available for purchase.
Products for use during pregnancy and family planning
With your FSA, you have access to a wide variety of contraceptives. Things like pregnancy and fertility testing, monitors, prenatal supplements, and equipment for nursing mothers are all included. No item is off-limits, not even condoms. FSA funds can also be used to pay for a variety of pregnancy-related services, including childbirth education and the hiring of a licensed doula.
The issue of birth control is more convoluted. You can use your FSA money to buy birth control if you have a prescription, but you must first get one. Ask your pharmacist if a particular item is covered by your FSA if you are unsure.
Programs for Quitting Smoking
The monies in your FSA account can also be used for long-term medical care plans. The good news is that you are not alone in your desire to kick the habit of smoking. According to a report by the surgeon general in 2020, the vast majority of adult smokers wish to quit. In 2018, 55.1% of adult smokers (21.5 million) reported trying to stop, according to data from the Centers for Disease Control and Prevention.
For example, if your doctor prescribes nicotine patches or gum, you can use your FSA funds to cover the cost. However, before starting any smoking cessation program, you should consult your doctor and obtain a prescription.
Sunscreen
Sunscreen is a perfectly legitimate purchase that can be made with your FSA funds. You can use your FSA balance on summer necessities like sunscreen even if you don't think you'll need it in December. We pay for any broad-spectrum sunscreen with an SPF of 15 or more, including moisturizers with the same degree of protection. Sunscreen has a shelf life of up to three years, in case you were wondering. That being said, feel free to stock up to your heart's content.
What Can I Get Reimbursed From My FSA and What Can't I?
Which costs can be reimbursed is decided by the Internal Revenue Service. Copayments for medical services, orthodontic and dental care, vision care (including glasses and contacts), and medicine are all fair game. This kind of FSA is provided by a lot of companies. Medical, dental, optical, and pharmaceutical costs are all paid for.
If I mishandle my FSA, what will happen?
You are responsible for reimbursing your account for any unauthorized or inappropriate use of the benefits card. If you make a purchase that is not covered, you will be notified and your benefits card may be temporarily disabled until the issue is resolved.
How about toothpaste? Can I use my FSA money to buy some?
No. To no one's surprise, toothpaste is not on the extensive list of products that qualify for FSA benefits.
Summing Up
Financial savings accounts (FSAs) are a terrific benefit for employees who are eligible for them through their employers. You should make an effort to predict how much to deposit so that you can spend it all before the end of the year, but the reality is that most people will have some money left over in December. Find out the details of your strategy and determine if you will have any breathing room to use the funds. Check out the wide variety of goods and services that qualify for payment from your FSA if you're in a bind and need to use up your balance before the year ends.
