Health care costs are often a surprise and can be the source of a lot of stress, but employers often provide options to alleviate the burden. One such tool is a flexible spending account, or FSA. “But what can I use my FSA for?” you might be asking. First, let’s go over the basics.
What Is an FSA?
An FSA allows you to take a tax-exempt portion of your paycheck and set it aside specifically to use on health care costs. You can only set this up during your employer’s open enrollment period, but once you have, the funds become available right away. Don’t miss that detail: While you’ll be contributing to your FSA with each paycheck throughout the year, you can use the total amount you elected to fund as soon as the account is active.
In 2019, the maximum contribution is $2,700, which should certainly make a dent in your expenses. But keep in mind that for the most part these funds do not roll over from one year to the next. This means that planning ahead is especially important, as is knowing in advance what kinds of things you can expect to spend your FSA funds on.
What Can I Use My FSA For?
The FSA Store offers a comprehensive list of the broad range of purchases that are FSA-eligible. But here’s a quick starter guide to some of the areas you’ll want to know about.
- Co-payments. That’s right! Your FSA can be used to cover the cost of in-network medical copays, including prescription drugs, covered procedures and other fees such as emergency room costs.
- Over-the-counter medications and treatments. Your FSA can be a great way to stock up on the staples you need for day-to-day aches and pains, such as pain relievers, antacids and even supplements. The only caveat is that you’ll need a prescription to apply your FSA to these purchases, so talking with your doctor is the best way to get everything you were looking for. They should be familiar with FSA benefits and can write a prescription for covered items without incident.
- First-aid essentials. No prescription necessary! Grab bandages, thermometers, heating pads and joint braces with your FSA and keep your first-aid kit well-stocked.
- Foot care. A variety of foot care products are FSA-eligible, such as insoles and gel inserts. You can even purchase an arch brace or a foot massager without a prescription.
- Dental expenses. If you ever need X-rays, cleanings or fillings at the dentist, you should be using your FSA to fund them. You can also usually buy mouthguards and cleaning solutions for retainers or dentures without a prescription, so almost all of your dental needs can be handled with an FSA! You just have to buy toothpaste and whitening strips on your own dime.
- Bedroom safety. Condoms, pregnancy tests and fertility kits are all FSA-eligible, as are prescription contraceptives. So with an FSA, you can always stay safe.
Why Is an FSA the Right Call?
Now, of course you can only get so excited by the idea of the thousands of dollars you can spend on health care purchases in a year. But those costs are a reality, and FSAs help make that reality easier to face.
As a bonus, the tax benefits of FSAs are hard to miss. When you contribute money to your FSA, that money comes out of your paycheck before it’s taxed. This diminishes your taxable income, which saves you money come tax season.
So ask your employer about getting set up with a flexible spending account, and then come back to this guide to make sure you’re getting the most out of it.