Use It or Lose It - Maximize Your FSA Benefits Before It’s Too Late

Employer-sponsored health care insurance plans allow the employees to enjoy tax-free medical services from a portion of their income. Employers can set up FSA accounts to allow their employees to enjoy its benefits.

What Does Use It or Lose It Mean?

Use it or lose it is a term used for FSA benefits, where you can lose all the funds in your flexible spending account if you do not use it by the end of the plan year. Your employer can give you a grace period of two and a half months or allow you to roll over some money to the next plan. However, the grace period accorded may not be enough to maximize all your benefits as you should have. Therefore, you stand a chance to lose everything.

What Is an FSA?

A flexible spending account (FSA) is an account where you contribute a portion of your income from your workplace to cover your healthcare plan. FSA accounts get funded with pre-taxed money from your income.

Flexible spending accounts have two categories. There is Health Care and Dependent Care FSA. Health care caters for your medical expenses, while dependent care caters for your dependent care expenses such as summer camp, daycare, or preschool.

How to Maximize Your Benefits Before Your Plan Ends

Learning how to maximize the benefits your FSA offers is key to enjoying the provisions of your contribution. The next appointment you have with your dentist or doctor, ensure you have your FSA card to allow you to pay upfront for the services you already set money apart for in your FSA account.

Create a habit of regularly monitoring your flexible spending account to regulate how you spend the funds for your medical care. Also, be knowledgeable about your eligible medical expenses to use them to the maximum. Finally, ensure you understand the deadlines for your plan.

Advantages of an FSA Account

Flexible spending accounts offer significant advantages for their recipients, such as:

• Your taxable income gets lowered because the funds contributed to your FSA account are deducted from your income before taxation. Your salary allows you to take home more money than you previously could if you did not have an FSA.
• FSA covers your medical care expenses that your health insurance has not covered, such as travel vaccines, preventative testing, or over-the-counter drugs.
• Your FSA funds are readily available for use. The amount you pledge at the beginning of the plan year is available for your use immediately after you begin the plan.

Most flexible spending accounts issue debit cards, allowing for easy and direct payment of expenses.

Disadvantages of an FSA Account

There are cons you ought to consider about FSA accounts before opening one:

• Your money will get lost if not used by the end of the plan year. 

• A flexible spending account is tied to the income you receive from your employer.

• The IRS limits the amount contributed to your flexible spending account.

For more flexible spending account benefits, visit Rudell Gary S. Jacinto, DMD, at our office in Los Angeles, California. You can call (323) 405-9428 today to schedule an appointment.