Your Money Adviser: An Autumn Check of Your Flexible Spending Account

The accounts, formally known as flexible spending arrangements, or F.S.A.’s, help you save money by letting you defer money pretax to pay for expenses that aren’t covered by your health insurance plan, like co-payments and coinsurance, as well as dental and vision costs.

As of early this year, about 23 percent of people with private health insurance were in a family that had an F.S.A. for medical expenses, according to the Centers for Disease Control and Prevention. That’s up from about 19 percent in 2008.

If you have a medical expense, the funds in a flexible spending account are available to you once the plan year starts; you don’t have to wait until you have accumulated enough to cover a bill.

The catch: If you don’t use all the money by the plan’s annual deadline, you forfeit it.

Flexible spending accounts differ in that way — and in others — from health savings accounts, or H.S.A.’s, which let you keep the money you contribute if you don’t use it. H.S.A.’s can be used only with a high-deductible health plan and can be spent only as you accumulate the funds, not in advance.

Many flexible spending accounts have calendar-year deadlines, so you must spend the money by Dec. 31. However, tax rules let companies offer an extra two-and-a-half-month grace period after Jan. 1, if they choose. In that case, there’s no rush because you may have until March 15 to spend the money. So check with your human resources office. “Do you need to panic? Probably not,” said Jody Dietel, compliance officer with the benefits manager WageWorks.

Ms. Dietel suggests going online to your health benefits site to check your claims history, to see if there are any eligible costs that you haven’t yet submitted for reimbursement.

If you do have a significant amount of money left, consider needs that might be eligible. Vision examinations, contact lenses, maintenance medications, blood pressure monitors and even a good first aid kit can usually qualify.

Keep in mind, however, that F.S.A.’s cannot be used for over-the-counter drugs unless you have a prescription. It may seem odd to ask your doctor for one, but it’s worth it for a product you expect to take routinely — say, cough medicine for colds, or glucosamine for joint health.

FSAStore.com, an online retailer that stocks only items that are eligible for flexible-spending reimbursement, lists items that require a prescription and those that don’t. If you choose, you can have the store contact your doctor and seek a prescription on your behalf, said a spokeswoman, Maria Tenaglia; she said the site was successful in obtaining one 85 percent of the time.

Many over-the-counter items, however, don’t require a prescription for reimbursement, she said, including products like sun block and contact lens cleaning solution.

■ Where can I find a list of items eligible for reimbursement from a flexible spending account?

In general, items that are deductible as medical expenses on your taxes are eligible for F.S.A. reimbursement. You can check Publication 502 from the Internal Revenue Service.

■ How much can I set aside in my F.S.A.?

The Affordable Care Act set a limit of $2,500 for deferrals in flexible spending accounts. (The limit is indexed to inflation; the government hasn’t yet said what the limit will be for 2014.) But that limit is per person, so you and your spouse can each set aside $2,500.

■ Can I use both an F.S.A. and a health savings account?

Yes — but if you have a health savings account, the flexible spending account must be a “limited purpose” version that allows reimbursement only for dental and vision expenses, said Roy Ramthun, an H.S.A. consultant.

This article has been revised to reflect the following correction:

Correction: October 30, 2013

An earlier version of this article erroneously included an over-the-counter product among others that are eligible for reimbursement without a prescription using a health care flexible spending account. While purchases of sun block and contact lens cleaning solution are eligible for reimbursement from an F.S.A., diaper cream does not qualify for reimbursement unless it has been prescribed by a doctor.

Article source: http://www.nytimes.com/2013/10/29/your-money/an-autumn-check-of-your-flexible-spending-account.html?partner=rss&emc=rss