By Kathleen Kingsbury
NEW YORK Dec 13 One in three workers is about
to give income back to their employer at the end of the year.
That is because some 33 percent of employees are holding
balances in use-it-or-lose-it flexible spending accounts (FSA)
for healthcare, according to WageWorks Inc, a company that
administers benefits programs.
An FSA allows employees to set aside pretax dollars to pay
for out-of-pocket medical expenses; most commonly they are used
for doctor visit co-pays or prescription drugs. "It's a really a
way to maximize your take-home pay, give yourself a raise," said
Jody Dietel, chief compliance officer at WageWorks.
But if you do not use the full amount by the end of the
year, the leftover balance usually reverts to your employer,
said Barry Schilmeister, a partner at human-resources consulting
firm Mercer. (Some employers extend that date to March 15 of the
following year.) Most employers apply those leftover funds to
benefit administrative costs, saving themselves money but not
benefitting their employees.
In 2013, FSAs under U.S. health reform will for the first
time be capped at $2,500; previously, employers set their own
limits that averaged twice that, according to Total
Administrative Services Inc (TASC), a benefits administrator.
The U.S. Treasury Department last summer also asked for
comment on allowing FSAs to carry over from one year to the
next. "We're very hopeful that the use-it-or-lose-it requirement
will go away," said Natasha Rankin, executive director of the
industry group Employers Council on Flexible Compensation
Only about 28 percent of employees use FSAs. Rankin believes
they would be more popular if workers could carry them over. In
contrast, healthcare savings accounts paired with high
deductible insurance plans are governed by a different set of
rules. Employees own those accounts directly and can accumulate
funds in them indefinitely.
For workers with traditional FSAs, December is usually the
time to drain the account. There are creative ways to do that.
Here are ten ways to find qualifying expenses you may not have
-- Review what you have spent already. Often, a look at your
records will yield medical expenses you have incurred over the
year but have not yet withdrawn from your FSA. Check with your
insurer for a list of all your office visits in 2012 for
unreimbursed co-pays, and your local pharmacy can give you a
list of prescriptions filled. Then reimburse yourself out of
-- Head to the drugstore. Although over-the-counter
medications are only eligible with a prescription, ECFC counts
more than 32,000 over-the-counter items that do not require
prescriptions and can be paid for with FSA money, including
first-aid basics such as Band-Aids. A complete list is regularly
updated by the information clearinghouse Special Interest Group
for IIAS Standards and can be found on its website ().
-- Pay for parking. If you drive to medical appointments,
out-of-pocket expenses, such as parking or tolls, qualify. You
can also claim 19 cents per mile driven as well as costs for
meals or lodging during a hospital stay. Don't forget receipts
for ambulance service, bus, taxi and airline fares related to
medical visits as well.
-- Kick a bad habit. Pay for smoking cessation, alcohol or
drug treatment, or medically needed weight loss programs. Or
have your cholesterol checked. Your employer might help,
offering cash bonuses or insurance discounts to workers who do
the right thing.
-- Make appointments. Have you been putting off a dental
cleaning? An eye exam? Schedule and pay for them now. Even if
your insurance covers preventive care, your FSA can pay for
necessary follow-up. Plus, stock up on glasses, contact lenses,
even contact solution - all qualifying expenses.
-- Schedule and pay for "discretionary" surgeries. If you
have a large balance, Schilmeister suggests trying to arrange to
have any elective surgeries done that you have been putting off,
such as wart, corn or polyp removal.
-- Get adjusted. Although rarely covered by insurance, trips
to the chiropractor, acupuncturist, even osteopath can be paid
for with FSA money. Also often overlooked is foot health, Rankin
said, which is linked to conditions such as diabetes or
-- Get pregnant, or not. For parents-to-be, FSA funds will
pay for fertility treatments, pregnancy test kits, even Viagra.
Prep for baby by using your FSA to buy a breast pump. Adoptive
parents can also have any medical expenses associated with the
adoption reimbursed. On the other hand, sterilization treatments
such as a vasectomy as well as birth control also qualify.
-- Think ahead. Considering LASIK surgery next year? Kids
need braces? See if you can get started in the last weeks of
December instead. "Orthodontists may let you pay for the full
treatment upfront," said Paul Fronstein of the Washington,
DC-based Employee Benefits Research Institute. "Or spread it out
across several years if that's better."
-- Don't stress. An average of $120 is left in FSAs, Dietel
notes, with most people forfeiting less than $100. "You've
already saved up to 40 percent in taxes," she said. "So, even
with a small balance, you're probably still ahead money-wise."
If you are still feeling anxious about that, ask your doctor
to prescribe a massage. Then you can use the rest of your FSA to
pay for it.