End of Year Is Approaching: Utilize Your FSA Benefits Before It’s Too Late

End of Year Is Approaching: Utilize Your FSA Benefits Before It’s Too Late

End of Year Is Approaching: Utilize Your FSA Benefits Before It’s Too Late

End of Year Is Approaching: Utilize Your FSA Benefits Before It’s Too Late

The end of the year is approaching. It is time to use FSA benefits before it is too late. Do you have a flexible spending account? If so, you probably understand that FSA accounts are a great way to help people spend significantly less on health care. However, to save money, you need to spend everything in your flexible spending account before the end of the year.


 

What Is an FSA Account?


If you have health insurance through your job, you can utilize your FSA to pay for several costs. These include some drugs, deductibles, copayments, and other types of health care costs. Furthermore, using a flexible savings account can help reduce your taxes.


A flexible saving account is a special type of account people put money into. You do not pay taxes on the funds in your account, which means you will save money. Your employer may choose to make contributions to your FSA. However, employers do not have to do so.


Also called a flexible spending arrangement, this is a form of employer-sponsored account. It allows employees to put aside tax-free money for eligible health care expenses. For 2021, the IRS limit for annual contributions to a flexible spending account is $2,750.


Unlike money in a health savings account, the dollars in your FSA usually expire annually. So if you fail to spend the money, you will lose it at the end of the year. The amount of money you can save may surprise you.


 

How FSAs Work


Everyone knows that the cost of health care can be overwhelming, even for families and individuals with insurance. People often find themselves having to spend a lot of money on certain out-of-pocket health care costs. Flexible spending accounts help offset high health care costs.


They allow people to use their pretax dollars to pay for some medical expenses. This means that you will receive a 30 percent discount, depending on your tax bracket, on your allowable healthcare costs.


 

Use It or Lose It


Flexible spending accounts are usually use-it-or-lose-it types of plans. This means that you have about one year to spend the total sum of funds in your account. Otherwise, you will lose your money, which will become your employer’s money.


However, the IRS allows employers to offer their employees a 2 ½-month grace period to utilize the leftover funds. Employers can also carry over up to $550 of the leftover funds into the next year.


 

Types of FSAs


The different types of flexible savings account available include:

  • Healthcare FSA.
  • Dependent Care FSA.
  • Limited Purpose FSA.


 

How to Spend Leftover Funds in Your FSA


You need to make it a priority to utilize the leftover money in your FSA before the deadline. Contact your FSA provider to determine the amount of money in your account. Note that the IRS allows account holders to spend their FSA funds on qualified medical expenses only.


Usually, any service that involves the services of a healthcare professional qualifies for FSA funds. Other expenses that qualify include eye exams, breast pump and supplies, eyeglasses and contact lenses, dental treatment, and chiropractic therapy. You can also use your FSA money to pay for diabetic supplies, dependent care, first-aid supplies, birth control pills, and more.



To learn more about FSA benefits, visit Eye Luv Lucy Optometry at our office in San Jose, California. You can call (408) 294-9900 today to schedule an appointment.

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