How to Spend your 2024 FSA funds before it’s too late
I cannot believe it is already fall and while most people are thinking about how to incorporate pumpkin into their beverage line up - I’m wishing I still had an FSA (Flexible Spending Account), a super nice corporate perk. Do not waste your tears on me, your favorite corporate dropout - I am here to help any of you navigate this benefit.
What exactly is an FSA?
I was going to write this myself, but while completing research for this article I found two fascinating articles that breakdown the details:
A timeline of tax-free health care by the fsa store
TLDR; employer-driven health coverage began in the 1960s (truly wish it hadn’t) & in 2019 35 million people had FSAs
Who thought Flexible Spending Accounts were a good idea? - written by Dylan Scott for Vox and published on October 16, 2023
TLDR; my favorite two facts are that FSAs are actually about 40 years old. Plus, among workers in the bottom 25% of earnings, just 1 in 5 are offered a healthcare FSA by their job - so basically this is a tax loophole for high wage workers (welcome to America!)
Tell me the facts on why this is a problem?
According to the EBRI, that completed analysis on 3.2 million FSAs in 2022, roughly HALF of FSA accountholders forfeited funds to their employe. The average amount of funds forfeited was $441 (!!!)
Now, I don’t know about you, but I would love to have an extra $441 in my pocket for health-related expenses.
What has Lauren spent FSA money on previously?
While I haven’t had an FSA since early 2023 here are 14 examples of what I spent FSA money on:
At-Home Care: Bandages, Pimple patches, eye drops, Tums, throat lozenges & Dayquil
Sun protection: SPF 15+ lip balm & SPF 30 sunscreen
Period products: pads, tampons, liners and period underwear
Appointments: Acupuncture, doctor appointment copays
Eye care: Contact solution, Contacts, prescription glasses and sunglasses
Prescription medications
Antibacterial Hand Sanitizer with 60%+ alcohol
Still at a loss for what to spend your remaining dollars on? Check out the most comprehensive FSA Eligibility list I have seen to date. They even have a surprisingly eligible category which includes some of the creative things you had no idea were on the list.
How do you plan better for next year?
If you believe you will have an FSA option through your workplace in 2025 you can start planning by answering the following questions and basically making an FSA-eligible budget:
Do you have planned surgeries, doctor’s appointments, etc. that you can project the cost of?
If you wear contacts or glasses do you plan to make a new purchase next year?
Do you take prescription medications? How often do you refill them and what does that cost?
Most medications are for 30 or 90 day supplies. If it’s a 30 day supply and you expect to remain on the medication - multiply the cost by 12 or 4 respectively
Are there OTC (over-the-counter) medications you use at regular intervals such as allergy medication?
Are you running low on sunscreen and/or lip balms with SPF 15+?
How many period products do you run through per period?
Make your best educated guess to your spending so you don’t lose any hard-earned money. Additionally, your employer may offer a new rollover feature.
What are Lauren’s final thoughts on FSA planning?
It’s unfortunate that you cannot predict the future or your future health needs down to the penny. As of 2024, FSA contribution limit was $3,200. It will likely remain around that amount or increase slightly. You DO NOT need to put in a full $3,200!
I personally tended to input $1,000 annually and had 24 pay periods annually. This meant that $41.67 came out of my gross income every paycheck. If I had FSA money remaining by October or November I would treat myself to an acupuncture appointment or stock up on anything I might need that won’t expire rapidly.
I hope this helps you avoid losing out on your hard-earned money and find FSA-eligible products to spend every last penny of that FSA.
Want to learn more from me?
Have more questions? Book a free 20 minute introductory call with Lauren here.
Disclaimer: I am not a financial advisor. My suggestions are simply suggestions and not financial advice. You should always consider your personal financial situation and what works best for you prior to making financial decisions because personal finance is… well… personal.
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