What can I spend FSA funds on?
Flexible Spending Accounts (FSAs) are a popular employee benefit that allows individuals to set aside pre-tax dollars for certain healthcare and dependent care expenses. Understanding what you can spend your FSA funds on is crucial to maximizing this tax-saving opportunity. Let’s explore the various eligible expenses that you can use your FSA funds for.
Healthcare Expenses
One of the primary uses of FSA funds is for healthcare expenses. These funds can be used to pay for a wide range of medical costs that are not covered by your insurance plan. Some of the eligible healthcare expenses include:
– Prescription medications and over-the-counter drugs
– Dental and vision care
– Preventive care screenings and immunizations
– Co-pays, deductibles, and coinsurance for medical services
– Medical equipment, such as crutches, wheelchairs, and glucose monitors
– Insurance premiums for long-term care, accident, and disability insurance
Dependent Care Expenses
FSAs can also be used to cover dependent care expenses for children under 13 or disabled dependents. These funds can be used to pay for:
– Daycare services
– Before-and-after-school care
– Summer camp
– Babysitting services
– Adult day care for disabled dependents
Prescription Drugs and Over-the-Counter Medications
FSA funds can be used to purchase prescription medications and over-the-counter drugs that are recommended by a healthcare provider. This includes medications for chronic conditions, as well as everyday items like pain relievers, antacids, and cold remedies.
Insurance Premiums
Some FSAs allow you to use your funds to pay for insurance premiums for certain types of coverage, such as long-term care insurance, accident insurance, and disability insurance. Check with your employer to see if your FSA plan includes this benefit.
Eligible Over-the-Counter Items
In recent years, the IRS has expanded the list of eligible over-the-counter items that can be purchased with FSA funds. This now includes items like contact lens solution, bandages, and certain diabetes supplies. However, you must have a prescription for these items to be eligible for FSA reimbursement.
Important Considerations
It’s essential to note that FSA funds must be used within the plan year or the grace period, if applicable. Any unused funds at the end of the year or grace period may be forfeited. Additionally, certain restrictions may apply, depending on your employer’s specific FSA plan.
In conclusion, FSA funds can be used for a variety of healthcare and dependent care expenses, providing a valuable tax-saving opportunity for employees. By understanding the eligible expenses and staying within the plan guidelines, you can make the most of your FSA benefits.
