If you have a medical flexible spending account, or FSA, one of the key year-end tasks you need to take care of this month is ensuring that you don't lose any of this tax-free money.
Both of those options are at the discretion of the companies offering the tax-favored benefit.
A lot of companies, however, still just take advantage of the use it or lose it rule. This lets your boss keep any FSA money you and your coworkers don't spend by the end of the benefits year, which for many is Dec. 31.
That means that a lot of folks could lose a sizable chuck of their FSAs, especially if they've stashed the 2018 maximum of $2,500. Because of the looming loss deadline, that FSA maximum also is this week's By the Numbers figure.
Many ways to use up account: So how to spend all of your FSA funds?
You probably already know that as a general rule, you can use your FSA money to pay for any medical expense your health plan doesn't cover. This includes things such as out-of-pocket costs, co-pays, co-insurance, hospital visits, prescription drugs and dental and vision expenses, which often are not covered by medical insurance plans.
But there also are some more unusual expenses that the IRS says are eligible for FSA reimbursement. Here are 10 that caught my eye and tax fancy.
1. Flu shots and other vaccines.
Yes, most health plans pick up the cost of annual flu shots, as well as other inoculations for such things as pneumonia and shingles. But if yours doesn't, don't forego this protection. Get the shots and get reimbursed from your FSA. You and your coworkers will appreciate your willingness to take the preventative needle.
2. Prescription sunglasses.
Note the prescription requirement. You can't just pick up a pair of cheap off-the-drugstore-display shades to look as cool as ZZ Top. You also can get a funky set of, say, zombie contact lenses, again as long as the lenses are needed for medical reasons. In these cases, you also can use FSA money to pay for equipment and materials required in connection with your contacts that help you get a 20-20 view, such as saline solution and enzyme cleaner.
Yes, this is an allowable over-the-counter expense and one that doesn't requires a doctor's Rx as long as it's 30 SPF or higher. The thought here, apparently, is that it's much cheaper to prevent any melanoma than to pay for treatment after skin cancer develops.
4. Sleep apnea (CPAP) machine.
Do you snore? Does your spouse? Either way, you might have sleep apnea, a condition that not only endangers a good night's sleep, but also is potentially life-threatening to the sufferer. Shelling out for a CPAP (continuous positive airway pressure) device could be the FSA-eligible answer. The machine and its related supplies are eligible.
If you're not afraid of needles, this traditional Chinese treatment is an allowable FSA expenditure, no questions asked. Note, however, that other alternative approaches, such as homeopathic, holistic or naturopathic treatments generally are not FSA reimbursable. Nutritional supplements are allowed only when they are prescribed by your doctor to treat a t for a specific medical condition.
6. Aids commonly required by older individuals.
As we age, we need more help, often literally. There's good FSA news in these cases. Such things as hearing aids (which are expensive; I just helped my mother finally get otic assistance), as well as the cost of repairs to the devices and batteries, are covered by the medical accounts. Other FSA-eligible medical aids often used by, but not limited to, older folks include canes, crutches, walkers, wheelchairs, false teeth, orthopedic shoes and elastic hosiery.
The juice for hearing aids are not the only FSA approved expenditure. You also can use your spending account money to pay for batteries used to operate any FSA-covered medical monitoring or diagnostic device. This includes, to name a few, batteries for blood pressure machines, blood sugar monitors, wheelchairs and heart defibrillators. You'll need to include a description of the item the batteries were purchased for when you request the battery reimbursement.
8. Certain travel costs.
Two medically-related travel situations are FSA eligible. First, you can use FSA money to cover amounts paid for transportation primarily for, and essential to, medical care. This includes the actual travel costs for various transportation modes (trains, planes, buses or your personal automobile), as well as up to $50 a night for lodging at the offsite treatment location.
You also can use FSA money to help pay conference costs — including event fees and transportation expenses — when the medical event's focus is a chronic illness that you, your spouse or your dependent suffers. When it comes to conference, however, meals are lodging are not eligible for FSA reimbursement.
9. Sports protective gear.
If you or your spouse or your dependent child plays sports, you know the importance of safety precautions. So does the IRS when it comes to FSA eligibility. The tax agency says mouthguards and other special protective sports gear used during sports activity to protect the player from injury is reimbursable from the tax-favored accounts.
No, this does not mean that you can use your FSA money to pay for your Dolly Parton shrine.
But you can use your medical account money to pay for a wig purchased upon the advice of a physician to help yourself, your spouse or a qualifying dependent relative deal with hair loss or baldness due to a medical condition or treatment for a disease.
Double check before buying: The IRS determines which expenses qualify for FSAs and publishes the list on its website.
You also should check with your company's FSA administrator. These folks also tend to put together such lists for workers, again typically on company or benefits websites.
In either case, you can search for the individual FSA expense that applies to you or scroll through the full list to see just what reimbursement opportunities you might be missing.
You also might find these items of interest:
- Items to add to your year-end FSA shopping list
- Medical tax provisions affected in 2019 by inflation
- Maximizing the many medical expenses that are still tax deductible