As the cost of health care climbs, more people are turning to flexible spending accounts, or FSAs, where they can sock away pre-tax dollars to be put toward a wide variety of health-related expenditures.
But as common as these plans are—43% of workers have access to an FSA, including nearly three-quarters of people who work for a company with more than 500 employees—it can be easy to forget about them until the very end of the year, when you suddenly remember these accounts have a use-it-or-lose-it rule about the funds you've been stockpiling so dutifully.
Well, this year's going to be different. Here are what health care and benefits experts say you should do—and when—to get the most bang out of your FSA buck.
Keep in mind that you can spend the balance in a health care FSA on medical expenses for the entire family, not just the participant. So when making decisions on what to purchase, consider the rest of the family's needs. That should open up other opportunities to reduce the balance in your account.
What to do now:
Read next: 3 Ways to Make the Most of Your FSA
See if you have a grace period or rollover option. "The first thing people should do is to find out if their employer has implemented the carryover provision," says Jody Dietel, chief compliance officer for WageWorks. It's optional for your employer to offer, but since the IRS loosened the "use it or lose it" rule a few years ago, more companies have been allowing workers to carry over up to $500 of unused FSA funds. Another option your employer may offer is a 2½ month grace period, which would give you until mid-March to spend down your remaining money.
Make sure you’ve submitted all your expenses to date. Check through your bank or credit card balances and medical bills to make sure you’re not missing anything, Dietel says. Record-keeping a little on the sparse side? “Checking with their medical, dental and vision carriers and local pharmacies [can yield] a record of out-of-pocket expenses to submit,” she says.
What to get started on in November:
Book appointments. Schedule orthodontia, dental, vision, and chiropractic visits now, advises Dan King, vice president and general manager of benefit services at ADP. "It could take weeks to get an appointment with a provider," he points out, and the longer you wait, the tighter their schedules tend to get.
Consider next year's deductions. Think about where you’ll be next year so you can evaluate if your current contributions are too much, just right, or not enough. “November is also a very good month to begin thinking about family medical needs for the upcoming calendar year,” says Steve Jackson, senior vice president of strategic development and channel sales at PrimePay. Since enrollment in your company's FSA plan can begin as early as November, think about your allocation for the coming year now.
What you can wait until December to tackle:
Buy new glasses. "Many medical providers [like] eye care providers realize that individuals have extra dollars to spend in their health FSAs at the end of the year," Jackson says. "For this reason, many medical retail providers will offer special discounts, coupons, and promotions" in the month of December. Get new glasses, contacts, or other devices or items you use regularly.
Stock up on prescriptions. “If they use mail order for prescription drugs, December may be a good time to refill, especially if their prescription drug benefit is changing in January,” King says.