The Flexible Spending Account Deadline Approaches

The Flexible Spending Account Deadline Approaches in Individual Health Insurance

If you have a flexible spending account (FSA) with your employer, you have until December 31 to spend any funds still in the account. As of January 1, 2008, all money in the account will be forfeited back to your employer.

An FSA is a savings account where you can save tax-free income to pay for health care expenses. But if you don’t use the money by the end of the year, it’s gone. The FSA’s use-it-or-lose-it policy makes many employees shy away from opening one. An alternate health account more people are considering is the health savings accounts (HSA), where funds roll over every year — and earn interest.

Employers can grant a grace period according to new rules have been put in effect for FSAs, reported USA Today. About half of participating employers have allowed their employees’ FSA funds to stay for two-and-a-half months after the deadline.

But a lot of FSA users will have to spend their health care money before the end of December. Drugstores, optometrists, and other places where FSA dollars can be spent have expect more business in the coming weeks.

“There definitely is an increase in patients coming in at the end of the year because of [FSA] spending,” said president of the American Optometric Association, Kevin Alexander.

What can you spend your FSA savings on? Most over-the-counter drugs, dental fees, a new pair of glasses, and even band aids. Here’s a short list of some covered and excluded FSA expenses.

You can also move your FSA funds into an HSA if you choose according to the new HSA rules for 2008…

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