When 2010 ended, did you leave some money unspent in your medical flexible spending account, usually referred to as an FSA?
Well, you might have a second chance at using that pretax cash. If your company allows you the IRS-approved two and a half month FSA grace period, then you still have time to use up last year's money.
First a quick refresher. With an FSAs you put money into the accounts, via automatic payroll deductions, before taxes are taken out. That lessens your tax bite.
Then you get to use that pre-tax money to pay for out-of-pocket medical costs, such as insurance co-pays, deductibles and uninsured services like chiropractic treatments or eye exams.
The one big drawback of FSAs is that if you don't use the money during your benefit year, you lose it. And since employee benefit years at most companies are the calendar year, that means your deadline expired last Dec. 31.
But life, including in some cases the tax code, is full of second chances.
If your employer offers the grace period (and not all do; it's just an IRS option, not a requirement) you can spend last year's leftover FSA money by March 15.
So the first thing to do is check with your benefits, payroll or HR manager today to find out if you have a week left to spend your 2010 FSA funds.
If the answer is yes, then get to spending that FSA money ASAP.
Revised FSA shopping list: There's along list of items on which you can spend your FSA money.
In addition to the aforementioned acupuncture and optometrist appointments, consider a dental exam, extra hearing aid batteries, vaccines, blood pressure monitor, mileage for medical treatments, breast pumps and supplies and, to make sure we have gender-specific FSA equality, a vasectomy.
But one thing you can no longer buy with FSA money, or at least not as easily, is over-the-counter medications.
Since Jan. 1, 2011, store bought remedies are FSA reimbursable only if you have a doctor's prescription for them. And yes, that rule is in effect even if you're using 2010 FSA money.
And there are a few items that still are FSA eligible in 2011 without a doctor's prescription: band aids, bandages and wraps, braces and supports, catheters, contact lens solutions and supplies, contraceptives and family planning items, denture adhesives, insulin and diabetic supplies, diagnostic tests and monitors, peroxide and rubbing alcohol, and first aid supplies.
So see, even without the aspirin etc. purchases, you still have lots of ways to use your medical flex account money. What you don't have is a lot of time!
So, as I already said, get ready, get on your FSA spending mark and go!
- FSA spending time is here
- Breast pumps get IRS FSA OK
- Get ready for FSA changes: 2011 limits on OTC medications
- Midyear Tax Tip #2: Plan health care account moves
- Adding adult kids to health care, FSAs
- March 15 is FSA deadline for some
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