Best Ways to Use Up FSA Savings Before Year End

Q. I overestimated my needs for health care this year and overfunded my FSA.  How can I use the extra money before year end?

A. There are 3 ways to use your extra money in FSA:

1. Move your FSA money if your employer allows carryovers
Generally FSA is use it or lose it, but an IRS rule change in 2012 allowed employers to op for a carryover of up to $500, giving employees the ability carry a balance into the next year.

In addition, some plays have a grace period (the maximum grace period is 2.5 months), during which period you can use the remaining FSA funds on qualifying medical expenses.

You can only have either grace period or carryover, but not both, per IRS laws.

2. Use FSA funds by the end of year on qualifying medical expenses
It's important to understand what are qualified medical expenses - they are the costs associated with diagnosing, mitigating, treating or preventing disease or illness, including equipment, medications, supplies, and out of pocket health care costs.

What are non-qualified medical expenses?  Here is a list:

• Over-the-counter drugs, unless you have a prescription
• Treatments and products solely for cosmetic benefits (plastic surgery, spa treatments, anti-aging creams, etc.)
• Products like Vitamins, unless prescribed for a specific deficiency or for treating an illness.

3. Spend FSA on supplies or treatments that you won't do otherwise
Here is a list of FSA-qualified expenses:

• Acupuncture
• Bandages
• Blood-pressure monitor 
• Chiropractic care
• Dentures, adhesives and cleaners
• Diabetic supplies
• First-aid kit
• Heating pad
• Hearing exams and aids
• Lasik eye surgery
• Medical ID bracelet
• Non-cosmetic dental treatments including crowns, implements and sealants
• Orthotic inserts and ovulation tests
• Smoking-cessation programs and medications
• Vision exams, eyeglasses and contact lenses