As we get closer to the holiday season and calendar year end, it’s time for those who have flexible spending accounts through their employers to review the balance. If there is a balance, now is the time to find ways to spend it.
A flexible spending account is a benefit employers offer through payroll. Typically coordinating with calendar year deductibles of medical coverage, employers offer the employee the opportunity to set a budget to an annual maximum of $2,500 to be divided per paycheck and taken before taxes to pay for medical, dental and vision expenses with pre-tax dollars. This is a benefit for both the employer and the employee as there is no state, federal and FICA tax calculated on these deductions, much like retirement deductions.
At this time of the year, an employee is most likely deciding what annual amount up to $2,500 to plan for in the new year as well as looking at the current year to spend any last minute dollars. Expenses known to be allowable through the flexible spending account are:
• Medical expenses: Deductibles, copayments, prescription drug copays, all within the medical plan
• Dental expenses when visiting the dentist — deductibles and co-insurance.
• Vision. Whether there is vision coverage or not, vision expenses for exams, glasses and contacts are all allowable expenses
What if there is no more need for these services and a balance still exists in the FSA account? Remember, in 2012, the then Patient Protection Affordable Care Act disallowed over-the-counter medications (cough medicine, ibuprofen, etc.) to be purchased with flexible spending account dollars. Here are a few examples of items and services to use up the flex dollars at the end of the year.
• Adhesive bandages
• First aid kits (I keep one in each car.)
• Contact solution
• Medical mileage, 24 cents per mile in 2013. Documentation is very important. Make sure you document name of provider/pharmacy, date and miles.
• Transportation to pharmacy to purchase eligible expenses.
• Transportation to provider for medical treatment.
If you have questions regarding flexible spending accounts, health savings accounts, healthcare reform or Medicare, please feel free to contact me at 515-225=9994, email@example.com or visit me at 5335 Merle Hay Road, Suite 2 in Johnston.
Information provided by Janis Van Ahn, Health Insurance Advisor LLC, 5335 Merle Hay Road, Suite 2, Johnston, 515-225-9994, firstname.lastname@example.org.