Don't Mess With Taxes

My H-E-B helps me keep track of store purchases that might be eligible for FSA reimbursement. (Crumpled receipt photo by Kay Bell)

After today's weekly grocery buying trip, I'm pulling out my stash of COVID-19 pandemic masks. Yes, I bought a lot. A whole lot!

As before, the facial protection is to shield me from the sneezes and coughs of many of my uncovered fellow H-E-B shoppers. This time, though, I'm hoping the upper respiratory cacophony is due to the changing weather, dust stirred up by the firing up of furnaces, and, here in Central Texas, cedar fever.

But you can't be too careful. Especially with the memory of coronavirus not really a memory yet.

That's part of the reason I dropped some over-the-counter (OTC) medications in my basket. You should do so, too, if you're looking for ways to spend your medical flexible spending account (FSA) money so that you don't lose it.

The usual FSA suspects: Everyone by now knows that OTC meds were added back to the approved FSA reimbursement list.

Lots of folks also get a spare set of prescription glasses, regular or sun protection, to spend down their FSAs. Others finally take care of some too-long-postponed dental work.

Companies such as GoodRx and FSA Store offer their lists to help FSA owners use the money. You also can check out the official Internal Revenue Service list in Publication 502 of approved tax deductible, and hence FSA OK, medical and dental expenditures.

Your local retailer pitches in, too. As the image at the top of this post from today's shopping trip notes, my H-E-B annotates its register receipts to identify those items that may qualify for FSA coverage. 

And, of course, you should check with your FSA administrator. That office might have a list as guidance, as well as details on special requirements, such as a letter of medical necessity that could mean FSA use for an item usually not covered.

If you don't have time to sort through all those documents right now, here are six FSA expenditure highlights.

1. First aid kit items: Most accidents happen at home, and a lot more of them happen during the holidays as some of us go to extreme lengths to deck our halls and other places in and outside our homes. A first kit is an approved FSA expenditure. Or you can make your own by collecting bandages, antibiotic ointments, pain medications, cold packs, antiseptic solution, a thermometer, and more in a container.

2. Emergency needs: If the accident requires more than what's in your first aid kit, you can use FSA fund to cover necessary critical care costs. This includes ambulance or airlift services to a hospital, the emergency room visit, and a variety of urgent care tests and treatments.

3. Hearing aids: If you spend too much time at holiday family gatherings repeating conversations to hard-of-hearing relatives, you should let them also know that the cost of hearing aids can be paid with FSA funds. If the problem is simply bad batteries, those also are on the approved list.

4. Indigestion medicine: The holidays are famous for over indulgence. So it's a good thing that indigestion treatments are FSA eligible. Just be sure you let the cooks know that you need the Tums or Pepto because their culinary skills are so good you couldn't resist over-eating.

5. Feminine hygiene products: Such personal items as pads, tampons, panty liners, menstrual cups, and period panties are on the FSA list. Even better, in 28 states these products also are now exempt from sales tax.

6. Mental health treatment: Unfortunately, the holidays are not good times for many. Check your medical coverage for psychiatric or other counseling that can help. Your FSA funds can be used to cover any copays or deductibles you must meet for this assistance. If your stress is more situational rather than a medical diagnosis, use FSA money to pay for an acupuncture session (or two or …) as a way to relieve anxiety.

Basic FSA rules: Again, these are just a very few items that are FSA eligible. The general IRS rule (per Publication 502) is that expenses related to "the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body" are tax deductible and as such are FSA eligible.

Again, if you're unsure about a product's FSA status, check with your benefits office, FSA administrator, or, of course, your tax advisor

Also keep your receipts. You'll need them to be reimbursed from your FSA. And make sure you are clear about the process for submitting the request for FSA payment.

I hope you don't need any, or at least not many, of these FSA expenses. But it's always a good idea to be ready, and to spend down your tax-favored medical account so that you don't lose the money.

You also might find these items of interest:

• 10 unusual but allowable FSA expenditures
• FSA spending is one of 7 tax moves to make this December
• Tax Turkey #5 to Avoid: Losing FSA money you left in your health care account

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