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Ron Bland • November 21, 2023

Clever Ways To Spend FSA Money Before the Deadline

Written by: Ron Bland, GBDS

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Short for "Flexible Spending Account," FSA money or funds has to do with funds that are put into a special account that are intended to be used to pay for certain IRS eligible out-of-pocket healthcare and medical-related expenses.


Not only can using an FSA account help give some much-needed financial relief to individuals, but it can also help reduce a person's taxable income - making it a great benefit for employers to both attract and retain top talent for their organization.

Blocks that say FSA

Two Options for the Extra Cash


At the same time, it's important for people to understand that any money deposited into their FSA account won't stay there indefinitely. Funds need to be used by the end of the plan year. However, there are two options employers can choose to allow employees more time to spend their funds: grace period or rollover.


Grace Period


If an employer elects a grace period, then the employee has a two and a half month period following the end of the plan year, during which employees can still incur eligible expenses and use any remaining funds in their account to cover those expenses. So for example if their plan year is from January 1st - December 31rd, under a regular FSA employees have to spend it by December 31 of the current calendar year - whereas if their employer elects a grace period then they have until March 15 of the following year.


Rollover


If the employer elects the FSA rollover it gives employees the ability to roll over up to $640 (new limit for the 2024 plan year) of unused funds to the next plan year. Regardless, if the end of the year is coming up, it's understandable to worry about that money going away without being able to derive any benefit from it.


Thankfully, all hope is not lost. If you still have money in an FSA account and are looking for creative ways to spend it before the deadline, there are a number of techniques that you'll want to keep in mind.

Can You Transfer FSA to a Bank Account?


The answer to this question is a straightforward "no." FSA money can only be used for designated healthcare-related purposes. As per the IRS, you cannot transfer that money to another account.

What Happens If Your FSA Money is Not Used?


At the end of the predetermined period, any FSA money that you have not already used for its designated purpose returns to your employer. Employers can choose to apply the forfeited funds to administrative costs from the plan year or they can choose to equally distribute the funds to employees who enroll in an FSA for the next year, as long as Internal Revenue Code Section 125 is not violated.

How to Use FSA Money


When a lot of people think about their FSA money, they think about uses like co-pays for doctor's appointments, hospital bills, and similar events of that nature. Really, they need to be thinking bigger - that money is a great way to cover expenses that they may otherwise overlook.

Little girl wearing eyeglasses

#1: Eyeglasses & Contact Lenses


Case in point: eyeglasses. If you wear prescription eyeglasses, and even if you've already been to an optometrist and have made sure that your prescription is up-to-date, that doesn't mean you can't still put that FSA money to good use. You can also use those funds to get a pair of prescription sunglasses or even prescription contact lenses to help get you through the year.


Many don't realize that even contact lens solutions are often covered under the terms and conditions of your standard FSA account.


#2. Acupuncture


On the subject of medical procedures, using FSA money can also be a good way to experiment with certain techniques that you may otherwise not think too much about. If you're someone who suffers from joint pain or even arthritis, you should know that FSA money can also be used to pay towards your next visit to an acupuncture professional.


#3. Shoe Support


Regardless of the type of job you have, the chances are high that you spend a lot of time on your feet every day. What you might not realize is that your FSA money can help with that, at least as far as massaging gel shoe inserts are concerned.

These are a great way to relieve some pressure on your feet while you stand for long periods every day, which can also help eliminate stress on other joints like your knees and hips as well. If you have already explored this type of option, don't worry - there are others available. Everything from arch support to callus remover medicine to Orthopedic shoe inserts, can also be paid for, giving you a little physical relief while you enjoy some financial relief as well.


#4. Acne Medicines


Other creative ways to spend FSA money include investing in those products that will help clear up some skin issues that you may be experiencing. Statistically speaking, a lot of people deal with the impacts of acne at some point throughout their lives - not just during their teenage years. Various acne medications can be eligible expenses.


#5. Skincare Treatment


A number of skincare products are also able to be paid for by your FSA money. This can include those products that are used to clear up skin conditions that are not acne-related, like Eczema and others.


#6. Stockpiling Medical Supplies


Don't forget about these potential supplies that you may not necessarily need right now, but that would be good to have around the house in the event of an emergency. You can never have too many bandages, for example, especially if you have a larger family.

Blood pressure monitors, heating pads, medical cold packs, you name it - all of them would be right at home in a First Aid kit. Thankfully, you don't necessarily have to run to the pharmacy and buy all of these things out-of-pocket - you can stock up on each one of them with that FSA money that you have been saving up throughout the year.


#7. Prescription Products


As an aside, it is important to understand that you can't necessarily walk into a store and use your FSA money for all the products outlined above. Some will definitely require a prescription, for example. But that's okay, because the checkup with your medical professional will be covered as well - allowing you to enjoy all the benefits of this process with as few of the potential downsides as possible.

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#8. Pain Relievers


You can also use your FSA money to stock up on non-prescription items. This can include medicines that are used to treat headaches, general pain relievers, and more that you can buy over the counter at a pharmacy.


#9. Thermometers


Thermometers are always important, but are especially helpful given everything going on in the world right now. Given the rise in COVID-19 cases there is a chance you'll be checking for a fever with you and your family members more frequently than ever and FSA money can help cover those expenses.


#10. Pregnancy and Baby-Related Items


You can use your FSA money to cover the cost of not only pregnancy tests, but also things like fertility monitors, breast pumps, and even baby breathing monitors as well.


#11. Dental Treatments


You can include in medical expenses the payments for preventing and easing dental disease. Preventive treatment covers the services of a dental hygienist or dentist, including procedures like teeth cleaning, applying sealants, and fluoride treatments to prevent tooth decay. Alleviating dental disease involves the services of a dentist for procedures such as X-rays, fillings, braces, extractions, dentures, and other dental treatments, besides teeth whitening.


#12. Hearing Aids


You can include in medical expenses the expenses for a hearing aid and the batteries, repairs, and maintenance necessary for its operation.


#13. Eye Surgery


You can include in medical expenses the payment for eye surgery to address defective vision, such as laser eye surgery or radial keratotomy.


#14. Psychiatric Care


You can include in medical expenses the payments you make for psychiatric care. This encompasses the expenses associated with supporting a mentally ill dependent at a specially equipped medical center where the dependent receives medical care.


#15. Other Approved IRS Medical Expenses


Finally, you can use your FSA funds on other IRS approved medical expenses, such as legal abortions, ambulances, crutches, therapy and more.

Other Benefits of FSAs for Your Employees


When it comes to employers contemplating the value of introducing a Flexible Spending Account (FSA) for their staff, it becomes crucial to delve into the wider spectrum of advantages it can bring to the organization. While the primary aim of an FSA remains to provide financial relief to individuals for IRS-qualified healthcare expenditures, there's more in it for employers than meets the eye. Notably, one compelling facet is how an FSA can serve as a potent tool for talent acquisition and retention. In today's fiercely competitive job market, benefits such as FSAs can significantly augment a company's appeal to potential hires and fortify its capacity to retain existing talent. Furthermore, FSAs hold the potential to reduce the taxable income of employees, leading to mutual savings in taxes for both employees and employers. Thus, even if an employer harbors initial reservations about FSAs, it is beneficial to explore their potential to elevate employee satisfaction, bolster financial well-being, and concurrently enhance the organization's financial standing.

The AEIS Approach


At AEIS, Inc., we aim to make things as simple as possible - this is true whether you're talking about spending FSA money before the aforementioned deadline, health insurance, employee benefits, or something in between. No matter what, we want to leverage our decades of combined experience to your advantage - making sure that the financial futures of both businesses and employees are taken care of, exactly the way things should be.


If you'd like to find out more information about spending FSA money in creative ways before the deadline, or if you have any additional questions that you'd like to talk to a professional about in a bit more detail, please don't hesitate to contact the team at AEIS today.


Disclaimer: Any information related to compliance, laws and regulations, or other subject matters in this blog is intended to be informational and does not constitute legal advice regarding any specific situation. The content of this blog is based on the most up-to-date information that was available on the date it was published and could be subject to change. Should you require further assistance or legal advice, please consult a licensed attorney.

About The Author:


Ronald L. Bland

President


Ron, a top insurance professional in the Bay Area since 1985, excels in creating cost-effective, comprehensive plans for business owners. His achievements include top-of-the-table status in the Million Dollar Round Table and speaking at the 2021 Top of the Table Conference. A Bay Area native, Ron graduated with honors from San Francisco State University and lives in San Mateo with his wife, Elaina, and their two children.

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