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Don’t Forget to Spend Your FSA Money

A friendly end-of-year reminder: Don’t forget to spend your FSA money. It’s one thing that actually became easier to do this year — in certain ways.

An FSA (flexible spending account) lets you set aside part of your paycheck before taxes to spend on eligible medical expenses. Generally, you need to use up all your FSA money by the end of the year, or you forfeit the balance. When we went into lockdown in March, many people put off healthcare and, as a result, had fewer opportunities than usual to spend their FSA money. Given the changed circumstances, the IRS made a few rule changes (tucked into the CARES Act), including:

  • Expanding the list of items that qualify as eligible medical expenses. This change applies to HSAs too.
  • Suspending a rule requiring prescriptions for over-the-counter medication purchased with FSA money. This change is permanent and applies to HSAs too.
  • Extending the optional grace period — offered by some but not all employers — through the end of the year. Though FSA money is traditionally thought of as “use it or lose it,” employers can choose to give employees an extra two-and-a-half-month grace period to use their FSA money after it would otherwise expire. If your plan had a grace period ending in 2020, it now ends on December 31. Employers can also choose to allow employees to carry over a certain amount of money into the following year, and the IRS increased that amount from $500 to $550 for 2021. (An FSA plan cannot include both a grace period and carrying over; it’s either-or.)

Even though lockdown ended, and in-person visits came back, Americans still haven’t done as much routine or elective care as in past years years. So if you have more unused FSA money than usual, you’re not alone. Here are some ways to use up your funds in 2020.


Stock up on menstrual products and/or over-the-counter meds.

Take advantage of the pandemic rule changes! Until the IRS loosened restrictions this year, you couldn’t use FSA money for tampons, pads or menstrual cups — period. And you needed an Rx in order to spend FSA money on ibuprofen, heartburn meds, allergy meds, cold/flu meds, etc. Now you can buy it all, without calling a doctor. Treat yourself to an extremely practical, pre-tax shopping spree at the FSA store (a one-stop-shop for eligible medical products).

Upgrade your COVID kit

Do you have a no-touch thermometer that everyone in your household can use for fast, easy temp checks? What about a pulse oximeter to check oxygen levels? Masks are eligible expenses too, although they require a Letter of Medical Necessity (LMN) from a doctor.

Improve the air you live/sleep/eat/work/Zoom in

We’ve spent a lot of time at home this year, and probably will for at least the first stretch of 2021. Air filters can clear away dust, pollen, smoke particles and other common allergens to make breathing easier. Air purifiers kill bacteria, mold and fungus in the air. Both devices are eligible expenses but require an LMN.

Explainers

How to Be a Patient During a Pandemic

Get fit

Has a doctor has recommended exercise to address a health issue? Well, you can use your FSA money to buy exercise equipment, as long as you have an LMN saying it’s necessary to treat a medical condition.

See a doctor from home

Did you put off any healthcare that could actually be done virtually? If so, book an end-of-year appointment and use your FSA money for the copay or any other out-of-pocket costs

End 2020 with 20/20

Whether you need stronger lenses, Rx sunnies or just a backup pair of glasses, corrective eyewear and accessories — as well as cleaning cloths and repair kits — can be purchased with FSA money.

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The Paper Gown, a Zocdoc-powered blog, strives to tell stories that help patients feel informed, empowered and understood. Views and opinions expressed on The Paper Gown do not necessarily reflect those of Zocdoc, Inc. Learn more.