Flexible Savings Accounts (FSAs) are not so flexible when it comes to one aspect: timing. Unlike Health Savings Accounts (HSAs), which, also offered by employers as a way to use pre-tax earnings towards health-related purchases, FSAs typically do not roll over into the next calendar year.
This means that if you’ve designated a certain amount of money (in 2018 individuals offered FSAs could put as much as $2650 in — a max that’s elevating to $2700 in 2019), you have until December 31 to use any remaining funds.
‘Use it or lose it’ or, in rare cases, get granted an extension
“The important thing to know is that FSA money is ‘use it or lose it,” says Hanna Horvath, staff reporter at PolicyGenius. “There are two exceptions to this rule, both of which are decided by employers. Sometimes they’ll give you grace period of two and a half months, meaning you’ll have until about March 15 [to spend the previous year’s FSA balance]. Another option is they’ll give you rollover up to $500.”
Horvath stresses that both of these extension options aren’t the general rule for FSAs. Ideally, you’ll want to use any FSA money remaining now before the clock strikes twelve on December 31.
As FSA holders likely know, you can use your FSA money to cover your co-pays as well as prescription costs, so if you’ve got any appointments or pharmacy pick-ups scheduled be sure to keep your FSA card handy.
If you’ve still got FSA cash to burn, consider these spending tips:
You can buy Band-Aids, but not Neosporin
FSAs are tricky in that they cover most OTC health-related drugstore purchases — but you need a prescription for some OTC items.
To be clear, certain items (like bandages and contact lens solution) you do not need an prescription for if paying with FSA funds; other products, like Neosporin or OTC allergy medicine, you do need an one.
What’s the deal here? Why do certain OTC items suddenly require prescriptions when using FSA funds? How do you know which items will be covered by your FSA money and which won’t sans Rx (an especially salient concern when you don’t have a FSA card, but instead are relying on reimbursement through your HR).
Fortunately for people with diabetes, insulin is an exception to this strange rule, which has been in effect for both FSAs and HSAs since January 2011.
A few ways to use your FSA money other than medical bills: Acupuncture, glasses and condoms
Sahir Zaveri co-founder of King Children, a custom eyewear startup, highlights some useful ways to use your FSA funds before the 12/31 deadline:
- Eyeglasses and contact lenses: Frames with prescription lenses and contacts are covered in FSAs (and HSAs).
- Acupuncture: If the holidays stress you out, now might be a perfect time to try acupuncture to head into the new year with wellness in mind.
- Condoms: Your FSA includes sexual health products like condoms so that you can practice safe habits in 2019.
- Your smile: FSAs can be used to pay for non-cosmetic dental care.
Need to spend those dollars quickly? The best bet is to shop the FSA Store
“The best way to use your FSA dollars before year end is to visit FSAstore.com,” says Zack Friedman, founder and CEO of Make Lemonade. “They have thousands of curated items that qualify for FSA spend, and using the site will save you significant time because everything is in one place. You can purchase everything from vitamins and sunscreen to first-aid kids and defibrillators.”
As a freelancer, I don’t have an FSA, but having spent some time researching FSA Store, I second Friedman’s advice. The site is easy to search, has very available customer service reps, and if additional paperwork is required by your employer, it “will have their customer service department prepare that,” says Ijeoma Iruke, consumer education specialist at FSAstore.com.
“We have 4,000 eligible products, which is arguably the most comprehensive eligibility list out there,” says Iruke.
FSA Store product gift baskets? Why not?
The site also offers curated “bundles” by category. For instance, if you're expecting or have a young child, you can get the Baby Care Bundle for $88.99. You could also curate your own bundle if you're about to go on a big trip by loading up your cart full of travel items that are FSA-approved for you or your spouse. FSA accounts can only be gifted to qualifying dependents, such as a spouse or a child.
FSA Store products worth the hype
Iruke shares some of the site’s big sellers right now:
- MedCline pillows: “One of our hottest items are these MedCline pillows. They’re good for [alleviating] snoring, acid reflux and other digestive issues,” says Iruke.
- Foot Circulators: “This is a big one for people with neuropathy or other circulation issues.”
- Defibrillator: “This is one of our biggest ticket items,” notes Iruke.
FSAstore.com will be accepting orders for 2018 FSA-covered items through midnight on New Year’s Eve, Iruke says, meaning you have literally until the very last minute of the year to make a purchase online.
Amazon is a no-go
Should you get an FSA in 2019?
FSAs are widely available from employers, but they don’t see a great deal of participation.
“According to a 2015 study by Mercer, only 22 percent of eligible employees contributed to a health care FSA and 6 percent contributed to a childcare FSA,” says Allison Kade, editorial director at financial services company Fabric. “So, based on that, I think it's likely that not as many people are benefiting from FSAs as could. I actually think underutilization may be as big an issue as lack of signing up in the first place.”
Getting the most out of your FSA funds can be a bit of a headache (particularly if you’re buying items that require prescriptions or if your company doesn’t issue a card but instead requires you to pay out of pocket and then get reimbursed), but these accounts are still worth looking into.
“FSAs get pushed aside because people may not think of them immediately or they do not realize what they cover,” says Horvath. “My big advice is to talk to your employer, see if they can offer rolling FSAs and look into what is covered. If you're spending regularly on doctor appointments or prescriptions, definitely look into this — almost everyone can benefit in some way.”
CORRECTION (Dec. 17, 2018, 11:02 p.m ET): An earlier version of this article misspelled the last name of the consumer education specialist at FSAstore.com. She is Ijeoma Iruke, not Irkue.