10 Ideas to Help Employees Use Up Healthcare FSAs
Flexible Spending Accounts (FSAs) are a popular, tax-efficient way to help people deal with everyday health costs. Employees participating in eligible health plans can make an affordable, pre-tax contribution to spending accounts each month, and then use those savings when they need to cover a medical expense.
However, there is one important catch with FSAs—they’re a use-it-or-lose-it benefit. Employees who have leftover savings at the end of the plan year will lose any unused funds as mandated by the IRS. There is no way for employers to return these funds to the employee, so it’s always important to encourage them to make educated decisions.
What happens to leftover FSA savings?
FSAs most commonly follow the calendar year, with employees expected to spend their savings before December 31st. While this is not the only option, it is the easiest to administer.
The IRS has relaxed the rules concerning unused FSA balances in recent years. Depending on the FSA terms, employees might have additional options:
- Carry forward: IRS rules allow employees to carry forward up to $610 into the following year.
- Grace period: FSA deadlines can be extended to March 15th of the following year, giving employees more time to decide.
Any funds remaining outside of these additional options are retained by the employer to offset the cost of those that spend more than they contribute.
Which medical expenses are FSA-eligible?
Healthcare FSA rules detail which expenses are allowable under the benefit and include a wide range of different medical expenses, including medication, treatment, and equipment.
There are too many options to list here, so employees should always check FSA eligibility before making any decisions. Employees should also understand some core concepts of FSAs:
- FSAs cover the employee and their dependents, including spouses and children under 26.
- FSAs must be used for treating a condition and can’t be spent on general wellness items like gym membership or fitness equipment.
- Sometimes, employees will be required to submit a Letter of Medical Necessity (LMN) to prove they require a specific item or treatment.
Because of these rules, people sometimes feel they need to save their FSA until they face a medical emergency. However, there are plenty of ways to use your FSA right now and improve your overall health.
10 healthy ways to use up a Flexible Spending Account
A lot of major stores, such as Target and Amazon, have special FSA-eligible sections that you can browse for ideas. Dedicated businesses such as FSA Store also offer detailed guides on how to spend your remaining allowance. Here are some suggestions to consider:
1. Stock up on everyday medication
A lot of over-the-counter medication is FSA-eligible with a prescription from a provider for a covered condition. This includes pain relief, allergy medication, menstrual care items, antacids, and cold & flu medication. You can even prepare for next summer by stocking up on SPF!
2. Get a better night’s sleep
Sleep is an essential part of wellness, and FSA rules allow you to mind over-the-counter sleep supplements, including melanin and valerian. Sleep aids such as CPAP machines are also eligible under FSA, as are related supplies like cleaning equipment and batteries.
3. Check in with your dentist
Most dental costs are covered by FSA rules, including basic dental work and even braces. If you need extra treatment, FSAs can help cover common procedures such as bridgework, fillings, crowns and extractions.
4. Get peace of mind with a health screening
FSAs can help cover the cost of vital checks, such as blood pressure, cholesterol, and hormone levels. You can also purchase equipment, such as a portable blood pressure monitor, or order a home screening kit.
5. Care for your vision and hearing
Regular vision and hearing checks are essential, especially as we get older. FSAs can cover these costs, plus expenses such as glasses, contact lenses, or hearing aids. You may also be eligible for corrective surgery such as Lasik.
6. Look after your mental health
Some types of mental health treatment are FSA-eligible expenses, including addiction counseling and therapy to help you through a serious illness diagnosis. Other types of counseling might be FSA-eligible if you can provide a Letter of Medical Necessity.
7. Relax with muscle therapy
Muscle and joint issues are increasingly common these days. FSAs can be used to pay for treatments such as hot and cold packs, compression wraps and support, and pain relief. You may also be able to buy electronic massagers or TENS machines for additional relief.
8. Quit smoking for good
The new year is a great time to quit smoking, and FSAs cover most smoking cessation treatments. This includes nicotine replacement gums and patches, or you can engage with a coach to help you kick the habit for good. Extra tip: Many insurance carriers also provide free or discounted support programs to help too!
9. Upgrade your home
Home mobility aids can be extremely expensive. FSAs can help with the cost of installing things like railings, ramps, elevators and other accessibility tools. In most cases, you’ll need a Letter of Medical Necessity before using FSA savings towards the cost.
10. Try an alternative treatment
For those wishing to pursue less traditional options, FSAs can also be utilized for some alternative and complementary treatments including homeopathy, acupuncture, and chiropractic care. It is important to note that all of these treatments must be related to a specific condition rather than general wellness.
Need help with compensation or benefits?
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It’s easier when you’ve got a trusted partner to help. Book a call with a Helios HR consultant today, and let’s talk about how to wow your employees with a well-chosen benefits plan.