Top Highlights
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FSA Expiration: Health Flexible Spending Account (FSA) funds typically expire at year-end, with many employers offering no rollover, leading to potential forfeiture of unspent amounts.
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Employer Variability: While some employers allow grace periods or carryovers (up to $660), about 33% have strict deadlines, meaning funds unused by December 31 are lost.
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Awareness Gap: Many account holders forfeit funds due to unawareness of deadlines or remaining balances, with the average unspent amount being $436 in 2023.
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Maximize Usage: Utilize FSA funds for everyday health-related purchases, including items like skincare, baby care, and telehealth services, to avoid losing money by year-end.
Maximizing Your FSA Funds
As the year draws to a close, many employees face a crucial deadline regarding their health flexible spending account (FSA) funds. These accounts, designed for pre-tax healthcare expenses, come with restrictions. Notably, many employers enforce a “use-it-or-lose-it” policy. If you don’t spend your funds by December 31, and your company doesn’t offer grace periods or rollovers, you risk losing your hard-earned money. Data shows that about half of FSA holders forfeited funds last year, leaving an average of $436 unspent. This trend often stems from a lack of awareness about the deadlines and remaining balances.
To avoid forfeiting your funds, keep track of your account balance throughout the year. Regularly check statements or online portals. Moreover, familiarize yourself with eligible expenses. Beyond typical medical costs, many everyday items qualify for FSA reimbursement. These include baby care products, skincare items, and even certain devices. The average household spends around $1,600 on FSA-eligible purchases yearly. By making a list, you ensure you maximize your funds before the clock runs out.
Smart Spending Strategies
Using your FSA funds intelligently can be straightforward, but it requires some proactive steps. First, consider your healthcare needs. If you anticipate expenses, such as a visit to the dentist or new glasses, schedule those appointments before year-end. Also, explore over-the-counter products you might need. Many people overlook everyday health items that can be purchased with FSA funds, which might include seasonal remedies or wellness gadgets.
Additionally, leverage the resources available. The FSA Store offers comprehensive lists of eligible items that you may not have considered. Engaging in these strategies not only helps you avoid losing your funds but can also positively impact your wellness journey. By thoughtfully using your FSA funds, you can ensure that you address your health needs while making the most of your financial resources. Remember, being informed and proactive can empower your healthcare decisions and enhance your life.
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