Collectively, workers can have lost about $1 billion in their flexible healthcare spending accounts last year.
However, depending on your employer’s rules for these FSAs, which allow workers to save pre-tax money to pay for eligible healthcare expenses, you may have avoided being part of this cohort – at least for now.
While 23% of companies that offer healthcare FSAs stick to the “use it or lose it” approach of December 31, the rest offer a grace period to spend the remaining funds or allow you defer a limited amount to the following year, according to the Employee Benefits Research Institute.
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However, if you are allowed to carry over funds from 2022, the limit is $570. And if you get a grace period, that could be up to 2.5 months, which would mean a new March 15 deadline to spend the money.
Nevertheless, some employees end up losing despite these reprieves.
Among workers allowed to carry over money, 49% end up losing all or part of it, according to the institute. For those who benefit from a grace period, this share is 37%. Additionally, 48% with a traditional deadline of December 31 also lose money.
Last year, individuals could have contributed up to $2,850 to their healthcare FSA. The limit for 2023 is $3,050.
Check the FSA rules at your workplace
It is common for workers not to know what their employer’s FSA rules are. If you’re not sure, contact your company’s human resources department, said Jake Spiegel, a research associate at the institute.
Alternatively, you can check your online FSA portal (if your company has one) for more information. There should also be a phone number (for customer service) on the back of your FSA debit card that you can call.
Ways to spend your FSA balance
If you find you only have a few months to spend the remaining funds from 2022 and you don’t know how to use them, be aware that the list of eligible expenses eligible for FSA money is longer than before, due to Congressional action in 2020.
Think about the types of over-the-counter drugs or other things you could buy and would buy anyway.”
Jake Spiegel
Associate Researcher at the Benefits Research Institute
For starters, over-the-counter medications no longer require a prescription to qualify. This includes things like cold medicine, anti-inflammatories, and allergy medicine.
Additionally, menstrual care products are now eligible, as are items that have become relevant during the pandemic: home Covid tests, masks, hand sanitizer and other personal protective equipment used to fight the virus.
“Think about the types of over-the-counter drugs or other things that you could buy and would buy anyway,” Spiegel said. “It can help people reduce some of their balance.”
Other eligible products include sunscreen, thermometers, eye care products, baby monitors and pregnancy tests. FSAstore.com has a list of eligible items if you are unsure if something would qualify.
Be aware that the IRS does not allow storage, which generally means that you cannot buy more than one product at a time than you can use in that tax year. The details, however, are determined by FSA administrators.