4 Tips for Using Up Your 2021 FSA

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KEY POINTS

  • Your flexible spending account may require you to use up your balance by Dec. 31.
  • Moving medical appointments up and stocking up on medications and essentials could be your ticket to depleting your funds in time.

Don't let your money go to waste.

The great thing about flexible spending accounts (FSAs) is that they allow you to save money for medical expenses in a tax-advantaged manner. When you put money into your savings account for healthcare expenses, you don't get any sort of tax break. But when you fund an FSA, your contributions to that account are tax free. This means if you put $1,000 into an FSA, the IRS won't tax you on $1,000 of your earnings.

But there's a definite drawback to using an FSA, and it's that you're required to commit to a yearly spending amount ahead of time. If you don't use up your balance by the time your plan year comes to an end, you risk forfeiting that leftover money.

Now some FSAs offer a little more flexibility in this regard. Some accounts give you a couple of extra months into the new year to rack up healthcare expenses against your balance, while others let you carry a certain dollar amount into your upcoming plan year. But if your FSA requires you to spend down your balance by Dec. 31, then the clock is most certainly ticking. Here are four tips for making the most of that money and not letting it go to waste.

1. Push up medical appointments

You may have medical appointments planned for early 2022. If you're able to tend to them sooner, you'll have a chance to use your remaining FSA funds to cover the cost of your copays. Similarly, if there are medical matters you've held off on dealing with, now may be a good time to schedule some appointments.

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2. Renew prescriptions early

Your insurance company will generally make you wait a certain amount of time to renew a prescription. But you may be eligible to renew some of your medications before the new year arrives. Call your insurer and see what options you have. That way, you can pay your copays this year out of your FSA.

3. Get a spare pair of eyeglasses

If you wear eyeglasses regularly, you can't afford to have them break. But sometimes, all it takes is an innocent bout of clumsiness, and it's adios, ability to see. A better bet is to have a spare pair of prescription glasses on hand in case your main pair is rendered unwearable. You can use your FSA to cover the cost of prescription eyewear -- even if you happen to choose a higher-end frame for fashion purposes. Incidentally, you can use your money to purchase prescription sunglasses, too.

4. Load up on over-the-counter essentials

It's not just prescription medications that are FSA-eligible. Some over-the-counter medications can also be purchased with money in an FSA. Plus, there's a long list of medical supplies your FSA can pay for, like bandages, ointment, and even sunscreen. Check out FSA Store's list of over 4,000 products you can use your FSA for.

Don't give up that FSA money

Setting money aside to cover healthcare costs is a smart move. But the last thing you want is for that money to go to waste. Employ these tips to spend down your FSA balance in the coming weeks -- and avoid leaving so much as a penny behind.

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