If you have a Flexible Spending Account (FSA), time is running out to use up your remaining balance. During the pandemic, you may have benefited from relief rules that allowed you to rollover FSA funds past the typical year-end deadline. This year, that rollover rule is being rolled back. Here’s what to know about using up your health FSA balance, so that you aren’t left forfeiting that cash.
How health FSAs typically work
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Health FSAs are employer-sponsored spending accounts where you can deposit pre-tax dollars and then tap into that money for qualifying healthcare expenses. The limit for 2022 contributions is $2,850, and the IRS has not yet announced the 2023 limit.
While this all may sound like a Health Savings Account (HSA), one of the major differences between the two is that FSA funds expire at the end of the year. It’s a “use it or lose it” account.
Pandemic rules are rolling back
The 2020 Cares Act instituted temporary rules that allowed you to roll over unspent FSA funds past the standard year-end deadline (assuming your employer adopted that rule change). Now, those pandemic rules will come to an end on Dec. 31 of this year. Even if your company allows you to roll over some current FSA funds into 2023, you’re limited to $570.
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Because you may have been able to rollover funds from previous years, your current balance could be higher than ever.
How to spend your FSA funds before the deadline
If you’re unlikely to pack out the rest of your year with doctor’s appointments—either because everywhere is booked months in advance or because that simply sounds dreadful—fear not. You can spend your remaining FSA funds on other qualifying healthcare costs.
You can use FSA funds to upgrade your prescription eyeglasses or buy more contact lenses. You could also hit your local pharmacy and stock up on certain FSA-eligible over-the-counter products, like first aid supplies, popular cold medicines, and even sunscreen. You can find a complete list at the FSA store here.
However you choose to spend your FSA funds, don’t let that money go to waste. After all, it came out of your paycheck. Check in with your employer’s rules are for any balance remaining on Dec. 31 this year, so you aren’t left forfeiting your hard-earned funds.