Each year, there’s a mini health and wellness shopping surge that takes place in the middle of March. You may not be aware of it, but it’s a big deal for millions of Americans like me who have a flexible spending account (FSA). Why? Because for many of us, if we don’t spend our remaining 2019 FSA funds by March 15, we will lose our hard-earned money. This is called the FSA Grace Period deadline, and it’s the last chance for about a third of all FSA users nationwide to spend their remaining 2019 flex dollars (provided you had a plan year that ended on December 31).
Here’s the catch: FSAs work on a plan year basis and most have a “use-it-or-lose-it” rule. So when you set aside money at the beginning of the year, you have to be sure to spend all of it, or unused money may be forfeited at the end of the year. Fortunately, the FSA Grace Period gives account holders an extension of 2.5 months to spend their dollars (not all employers offer a Grace Period and some may offer an alternative deadline option, so check with your benefits department).
As a mom, I don’t know what I would do without my FSA to help me save money on taxes each year, cover everyday health expenses like copayments for doctor visits, and shop worry-free for the qualifying health products I need for my family and I. But in my time working in the tax-free benefits industry, I’ve learned that only one-in-five people will enroll in an FSA through their employers and of those who do enroll, a surprising amount still have money left in their account at deadline time. So, with the FSA Grace Period right around the corner, now’s the time for a refresher on how to get the most out of your tax-free health dollars at deadline time. Here’s what I think all moms should know about using an FSA to protect their hard-earned money.
What’s a flexible spending account (FSA)?
An FSA is a pre-tax spending account offered by many employers that you can enroll in and contribute to through payroll deductions. The 2020 contribution limit for employee contributions is $2,750 for individuals and families, and you can only enroll in an FSA during open enrollment or if you have a qualifying change in status, so watch for this opportunity. FSAs are tax-advantaged accounts, so the contributions you make reduce your taxable income. Who can argue with paying less income tax and setting aside pre-tax money to use on qualified health expenses? There are thousands of eligible ways to spend your FSA funds. Check out this comprehensive online Eligibility List to see what’s covered.
How can an FSA help you save money?
FSAs have become a smart choice for many families as an easy way to reduce their tax liability while planning for family health care expenses. For example, an FSA user who makes the median U.S. income ($63,030), who sets aside the maximum FSA contribution for 2020 ($2,750), should save about $1,000 in payroll taxes over the course of the year. The bottom line is: It doesn’t matter what walk of life you come from, if your employer offers an FSA, chances are, it can help you save money on the products you need to keep your family healthy.
How can you use your FSA?
If you’re looking for some fast, high-value ways to spend remaining FSA dollars before March 15 on things you may need, consider the following products, which have proven to be among the most popular categories for the 2020 FSA Grace Period deadline:
Baby & Mom
If you’re a new mom or a mom-to-be, an FSA can help you cover the cost of many expected expenses from pregnancy through your child’s first few years of life. Prenatal vitamins, breastfeeding pumps and supplies, and many baby health items are all covered by an FSA.
Sun Care
As long as a sun care product has broad spectrum protection against UVA/UVB rays and a sun protection factor of SPF 15 or above, it’s FSA-eligible. That means sunscreens for all ages, SPF lip balm protection and more.
First Aid
Bandages, gauze, tape, medical scissors -- just about everything you’ll find in a first-aid kit -- is reimbursable with an FSA. There are even trail-ready first-aid kits if your family likes spending time outdoors.
Cold & Allergy
With the first day of spring coming on March 19, Grace Period shoppers also have a chance to get ahead of the allergy season. In addition to over-the-counter antihistamines and decongestants (available with an Rx), FSAs cover vaporizers, nasal irrigation devices and more to curb your seasonal allergy symptoms.
Pain Relief
Finally, pain relief is a huge category that is popular among FSA shoppers, from everyday home health aides like child-friendly hot/cold packs to more advanced pain relief devices like acupressure mats and TENS machines. Even fitness-minded individuals can take advantage of kinesiology tape, athletic braces and bandages, which will come in handy if your kids are active in sports.
Not only can your family benefit from the wealth of FSA-eligible products and services, but when you shop online with your FSA debit card, you get the convenience of shopping while the kids nap or while you’re waiting in the school pick-up line.
No matter what stage your family is at, if you’re one of the millions of Americans with a Grace Period and your plan year deadline was December 31, be sure to spend your remaining 2019 funds by March 15 or risk losing them to forfeiture. There are some really good deals available in the FSAstore.com Savings Center. And if you’re still on the fence about FSAs, check out FSAstore.com today to see how far your health care dollars can really go to benefit your family’s health and wellness.
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