Those who don't spend the remaining 2011 funds in their flexible spending accounts may be just days away from losing the money altogether.
Employer-sponsored medical FSAs let workers stash away pre-tax dollars for a year's worth of spending on out-of-pocket expenses. Contributed funds are "use it or lose it" -- workers forfeit any balance remaining at year's end --- but roughly 75% of employers take advantage of IRS rulings that allow for a grace period of up to 2.5 months, says Jody Dietel, chief compliance officer for WageWorks, which administers such accounts. Workers could have until March 15 to spend the remaining funds -- an average of $75, by WageWorks' estimates.
But the clock already ran out for some. Companies occasionally set a spending deadline earlier than March 15, or do not offer a grace period at all -- so Dietel suggests checking plan guidelines before making any moves. (Affected workers can often still claim some expenses, however, even if the deadline has passed. See below.) Even those with two weeks' time left might find that it's tough to schedule a doctor's appointment or an orthodontic consultation before the deadline.
Here's how to clear out the balance without losing a dime:
Review 2011 expenses
Look over last year's insurance claims and drugstore receipts to see if there were out-of-pocket medical expenses incurred but never submitted for payment, suggests Dietel. Even if a plan's grace period has come and gone, employers usually allow extra time to submit claims. Some will accept claims on 2011 expenses as late as June 2012, she says.
Look ahead to 2013
Starting next year, the health-care reform law will limit consumers to socking away $2,500 for qualified medical expenses in their flexible spending accounts, says Neil Crosby, a spokesman for the National Association of Health Underwriters. (Currently, there's no limit, although some employers impose their own caps.) Workers who want treatments eclipse that limit -- such as braces, laser vision-correction surgery or porcelain veneers and have substantial 2011 funds left over might consider having them done this year rather than waiting, he says. Many doctors will arrange payment plans to help spread out the cost over several years of FSA contributions.
"Do a personal health review: Are you up to date with your preventive care and immunizations? Have you seen the dentist and the eye doctor?" says Dietel. Scheduling check-ups now can help run down FSA balances with co-payments and un-covered portions of blood work, x-rays and other tests.
Load up on prescriptions now. Many pharmacies and insurer mail-order pharmacy plans will fill 90-day supplies, says Crosby. Employees also need prescriptions for FSA coverage of spending on over-the-counter meds such as aspirin and decongestants.
Stock the medicine cabinet
Go over the insurer's list of FSA-covered expenses to see what's worth buying more of, says Larry S. Harrison, an independent insurance broker in Las Vegas. Prescription eyeglasses and contact lenses are two of the more big-ticket items, but more everyday needs like bandages, sunscreen, and condoms are covered, too.