As the end of the calendar and plan year looms, it’s crucial to consider what you can do with any remaining funds in your Flexible Spending Account (FSA). Most of the funds in your FSA need to be spent before year-end because you may lose what you don’t spend. Unfortunately, unlike a Health Savings Account (HSA), you don’t get to keep your FSA money year after year. Your employer may allow a certain amount of your FSA funds to roll over to the following year. Check with your employer to confirm whether your plan includes this option.
What can you purchase with your FSA funds? Qualified medical expenses that would generally qualify for the federal medical and dental expenses deduction and incurred by the following persons.
- You and your spouse.
- All dependents you claim on your tax return.
- Any person you could have claimed as a dependent on your return except that:
- The person filed a joint return;
- The person had gross income of $4,300 or more; or
- You, or your spouse if filing jointly, could be claimed as a dependent on someone else’s 2021 return.
- Your child, if under age 27 at the end of your tax year.
Use your FSA to pay for medical, vision, and dental expenses like the following:
- Over-the-counter medicine (whether or not prescribed)
- Flu shots
- COVID-19 At-Home Detection Test
- Prescription sunglasses
- First aid items
- Menstrual care products
- Acupuncture
- Sunscreen (30 SPF or higher)
- Dental care
You cannot receive distributions from your FSA for the following expenses.
- Amounts paid for health insurance premiums.
- Amounts paid for long-term care coverage or expenses.
- Amounts that are covered under another health plan.