Use It or Lose It: 25 Ways to Spend Your Flex Account
by Stacy Francis, CFP®, CDFA
If you’ve been healthy this year, congratulations! But if you’ve spent less on medical expenses than you expected when you set up your flexible spending account, you may be scrambling to find ways to use the money before it disappears. Studies by benefits specialists regularly show that employees typically forfeit more than $100 each year in medical flexible spending accounts.
Flexible spending accounts offer employees a great way to reduce their taxable income while at the same time paying for medical or childcare expenses they know they’ll encounter during the year. Many companies let employees set aside $2,000 to $3,000 annually in pre-tax money to spend tax-free on medical expenses.
It’s a great deal, but the big catch is that you lose what you don’t use by the end of the plan year. But in late October, the Treasury Department announced a new $500 rollover option that companies can adopt voluntarily.
Savvy Ladies’ Tip: You can use the flexible spending account money for almost any health-related expense that isn’t covered by insurance, including:
Deductibles and co-payments
Dental work and orthodontia
Eyeglasses, prescription sunglasses, contact lenses and laser eye surgery
Psychotherapy, psychiatry, psychology
Drug and alcohol treatment
Smoking cessation programs and prescriptions
Medically necessary cosmetic surgery
Massage therapy to treat an injury, physical therapy and speech therapy
Out-of-pocket expenses for fertility treatments
Doctor-recommended weight-loss programs
Hearing aids and batteries
Medical equipment, such as wheelchairs, crutches or oxygen equipment
Assistance for the disabled, including guides, Braille books, seeing-eye or hearing-trained animals, note takers, etc.
Birth control pills, devices and procedures
Acupuncture or related procedures to treat a medical condition
Medically necessary prescriptions
Now you can also use flex funds for medications that don’t require a prescription, such as allergy and cold medications, antacids and pain relievers.
Stacy Francis is president and CEO of Francis Financial, Inc., a fee-only wealth management practice dedicated to investment advisory services for women, couples and those experiencing divorce. She is also the founder of Savvy Ladies®, a nonprofit organization that educates and empowers women to take control of their finances.