How to handle a balance in a flex spending account
It's a busy time for eye doctors.
The year-end surge in patients has little to do with patients' declining eyesight. It's mostly because of the unused cash in their health care spending accounts.
Flexible spending accounts, or FSAs, were designed to help employees put aside pre-tax dollars for costs such as medical expenses or dependent care. Within federal constraints, employers set limits — generally between $1,200 and $5,000 — that workers could put aside each year. Because an employee would forfeit any unused funds, many employers offer a grace period to help you avoid scrambling during the last few weeks of the year to spend money left in the account.
Employees in open-enrollment season for 2013 benefits face the dual tasks of figuring out how to use any money left in their 2012 accounts as well as how much to allocate from their paychecks next year.
“The bottom-line message is if you don't use it up, it is money you are leaving on the table,” said Peter Rosen, president of HR Strategies and Solutions in Atlanta. “People really don't know how to predict, and things are changing for next year.”
For 2013, federal regulations cut in half the maximum you can put into an FSA, with the new limit set at $2,500.
“It makes the decision making for the company easier, because there are fewer limits and they may have less liability,” Rosen said. “But it may not be the best decision for employees because many may like to put money away.”
If you're uncertain how much to put in a health care account, consumer websites and FSA administrators such as Ceridian Corp. offer online calculators to help you decide, based on your anticipated expenses and tax rates.
Facing a balance? It is rare that people forfeit their unspent FSA dollars, Rosen said. But if you find yourself with the prospect of leaving money on the table, there are several quick ways to make up the difference:
• Get informed. Verify your account balance — now — and confirm your company offers a 2013 grace period in which you can still use money you had planned to spend this year.
• Know what is covered. Websites such as Wageworks.com provide lists of what is covered under standard FSA programs. This is helpful for planning how to spend any excess funds this year, as well as deciding your level of participation in the coming year.
• Get some specs. Buying an extra pair of glasses — or prescription sunglasses — is a popular way to use up FSA dollars, Rosen said. Stock up on over-the-counter drugs. “If you want to stock up on baby aspirin, you have to have a prescription from your doctor to do it,” Rosen said. Consider elective surgery. Though cosmetic surgery is generally not covered, cosmetic surgery for birth defects, accidents or disease is allowed.
• Investigate alternative therapies. Think an herbal remedy might cure what ails you? Use unspent FSA dollars to find out.
• Log your miles. Track mileage to and from eligible health care visits and submit it for reimbursement out of your spending account.