How to Use Leftover Flexible Spending Account (FSA) Funds

A flexible spending account (FSA) for healthcare expenses may roll over into the next calendar year. Check your employer's benefits website or contact your human resources department to determine if any leftover funds in your flexible spending account may be used in the next year. Typically, they must be used by March 15th (the filing date for reimbursement may be even later, around May 1st) before the funds in your prior year's flexible spending account are forfeited.

NOTE: As of 1/1/2011, most over-the-counter items are NO LONGER eligible for FSA reimbursement (this includes using leftover 2010 funds).

Step 1

Determine remaining amount. Check how much you have in your flexible spending account from the prior year. Do not add in amounts allocated to the current year.

Step 2

Create spending plan: small budget. If you have less than $50 remaining in your flexible spending account, you may want to stock up on over-the-counter items and/or refill prescriptions. Aspirin, Advil, Tylenol, cold, flu, or cough medications, allergy medications, bandages, ointments or creams, and eye care items may all be eligible. You can usually obtain a list of approved flexible spending account expenses from your human resource department or the FSA provider's website.

Step 3

Create spending plan: medium budget. If you have up to several hundred dollars remaining in your flexible spending account, consider using the funds for the following items. Schedule doctor's, dentist's or specialist's appointments and use the funds to defray the co-pay. Order a new pair of eyeglasses (frames, lenses, or both) or prescription sunglasses. Some flexible spending account providers allow purchases of allergy-related items, such as air purifiers or special bedding. Check with your provider before making any purchases; you may need a doctor's approval in advance. You can also refill expensive prescriptions.

Step 4

Create spending plan: large budget. If you have quite a few hundred dollars or thousands of dollars remaining, then consider big-ticket items. If the cost exceeds your remaining funds, you can always use your current year's flexible spending account to cover the rest (presuming you allocated enough to this year's account). In addition to the items suggested under the small and medium budgets, you may want to consider Lasik surgery, braces, retainers, getting new fillings, caps, or crowns for your teeth, having wisdom teeth removed, or getting fitted for bite guards (if you grind your teeth at night). If you are experiencing difficulties with family planning, certain treatments may be eligible. Check how much is covered by your insurance provider versus how much you will have pay out-of-pocket and through your flexible spending account.

Step 5

Purchase items and/or services. Make all of your purchases prior to the deadline. Use your personal credit card or cash, not your flexible spending account card. If you use your FSA card, then the purchases will be deducted from your current year's (not prior year's) available balance.

Step 6

Submit receipts for reimbursement. Save all of the receipts and submit them before the filing deadline. You can typically download a "pay me back" claim form from your flexible spending account provider's website. Fax the completed form and copies of your receipts per the provider's instructions. Keep the original copies for tax purposes, if you have to resubmit claims, etc.

Tip

A flexible spending account typically does not cover cosmetic procedures such as tooth whitening or plastic surgery (for non-necessary reasons). A flexible spending account typically does not cover daily items or toiletries, such as toothpaste, toothbrushes, mouthwash, dental floss, etc. Setting aside funds through a flexible spending account may reduce your tax bill (by reducing your income, as you are funding it with pre-tax dollars).

Warning

Always check whether an expense is eligible for reimbursement under your flexible spending account before making a purchase. Use your regular credit card or cash to purchase items with leftover flexible spending account funds. If you use your FSA card, it will be deducted from your current year's available balance.

Things You'll Need

  • Flexible Spending Account

  • Remaining funds

  • Eligible expenses