c.2013 New York Times News Service
c.2013 New York Times News Service
As the end of the year approaches, itís a good time to check if you have a balance remaining in your health care flexible spending account.
The accounts, formally known as flexible spending arrangements, or FSAs, help you save money by letting you defer money pretax to pay for expenses that arenít covered by your health insurance plan, like co-payments and coinsurance, as well as dental and vision costs.
As of early this year, about 23 percent of people with private health insurance were in a family that had an FSA for medical expenses, according to the Centers for Disease Control and Prevention. Thatís up from about 19 percent in 2008.
If you have a medical expense, the funds in a flexible spending account are available to you once the plan year starts; you donít have to wait until you have accumulated enough to cover a bill.
The catch has been that if you donít use all the money by the planís annual deadline, you forfeit it. On Thursday, the Treasury Department said employers could now allow plan participants to carry over up to $500 of health FSA balances remaining at the end of a plan year. The rollover could begin as early as this year, although employers are not required to go along.
Flexible spending accounts differ in that way ó and in others ó from health savings accounts, or HSAs, which let you keep all the money you contribute if you donít use it. HSAs can be used only with a high-deductible health plan and can be spent only as you accumulate the funds, not in advance.
Many flexible spending accounts have traditionally had calendar-year deadlines, requiring that the money be spent by Dec. 31. Tax rules have let companies offer an extra two-and-a-half-month grace period after Jan. 1, if they choose, giving employees until March 15 to spend the money. But given the new guidelines, you should check with your human resources office to see whether your company will allow a rollover or will continue to require you to spend the money but with a grace period.
The new rules permit either a rollover or a grace period, but not both.
Jody Dietel, compliance officer with the benefits manager WageWorks, suggests going online to your health benefits site to check your claims history, to see if there are any eligible costs that you havenít yet submitted for reimbursement.
If you do have a significant amount of money left and need to spend it, consider needs that might be eligible. Vision examinations, contact lenses, maintenance medications, blood pressure monitors and even a good first aid kit can usually qualify.
Keep in mind, however, that FSAs cannot be used for over-the-counter drugs unless you have a prescription. It may seem odd to ask your doctor for one, but itís worth it for a product you expect to take routinely ó say, cough medicine for colds, or glucosamine for joint health.
Many over-the-counter items, however, donít require a prescription for reimbursement, she said, including products like sun block and contact lens cleaning solution.
Q: Where can I find a list of items eligible for reimbursement from a flexible spending account?
A: In general, items that are deductible as medical expenses on your taxes are eligible for FSA reimbursement. You can check Publication 502 from the Internal Revenue Service.
Q: How much can I set aside in my FSA?
A: The Affordable Care Act set a limit of $2,500 for deferrals in flexible spending accounts. (The limit is indexed to inflation; the government hasnít yet said what the limit will be for 2014.) That limit is per person; you and your spouse can each set aside $2,500.
Q: Can I use both an FSA and a health savings account?
A: Yes ó but if you have a health savings account, the flexible spending account must be a ďlimited purposeĒ version that allows reimbursement only for dental and vision expenses, said Roy Ramthun, an HSA consultant.