HSA/FSA
Last Call: How to Use Your FSA Funds Before They Expire
Did you know that FSA funds expire? Don’t let your potential tax and medical care savings go to waste.
October 7, 2024
Sam O'Keefe
Co-founder & CEO of Flex
Overview
Overview
Overview
🚀 Fast Facts: The FSA “Use-It-Or-Lose-It” Deadline
If you have an FSA, December 31 is the deadline to use your 2024 funds.
Start preparing now by reviewing the rules of your FSA and create a plan for how to make the most of the remaining money in your account.
You may be able to use FSA funds on items and services you didn’t expect, if you have a Letter of Medical Necessity.
If you have a Flexible Spending Account (FSA), there’s a good chance you risk losing money come December 31. That’s because for many FSA owners, the end of the year is the use-it-or-lose-it deadline.
In fact, more than half of FSA account holders forfeit funds each year according to the Employee Benefit Research Institute.
We’re not talking about loose change either, the average forfeiture was $441 in 2022 — money that could have paid for medical expenses, or things like a new smart watch or an annual gym membership.
If you’d rather use it (than lose it), read on to learn about the important deadlines and find tips for how to spend your FSA funds before they’re gone.
1. Review Your Plan to Get the Full Details
To start, you want to review your specific FSA account to see when the plan ends because policies can vary.
A quick reminder, FSAs are employer-sponsored benefit plans that let you set aside pre-tax money from your paycheck (which lowers your taxable income) to cover healthcare and dependent care expenses.
This makes FSAs a valuable tax savings tool. According to TurboTax, if you made $50,000 this year and your tax rate is 30%, contributing $2,000 to your FSA account will have saved you $600 on taxes.
FSA deadline 2024: When do FSA funds expire?
Typically, FSAs operate through the calendar year, from January 1 through December 31. However, not all plans are the same and your employer or service provider may have an alternate schedule.
Further, not all funds expire at the end of the plan’s term — there may be ways to extend the use period of your funds.
Possible FSA extensions: Grace Periods, Rollovers, and Carryovers
Employers can, but don’t have to, offer ways to extend the usage of your funds or allow you to carryover cash into the following year.
Here are the potential options:
1. Grace period: About 36% of FSA plans allow a grace period of up to 2 1/2 months. That means that if your plan runs on a calendar year, you will be able to use your FSA funds up to March 15. Further, the plan may also have a “run-out period” which extends the deadline to submit claims another 15 days. In this example, you can submit claims until March 30 for expenses incurred from the beginning of the previous plan year until March 15th — the run-out period simply gives you more time to submit claims for funds spent.
How does a grace period work?
If there is a grace period in your plan, claims submitted during that period are automatically taken out of the prior year's remaining funds. Once those funds are used up, you will then start drawing from the current plan year.
2. Carryover: Plans may allow up to $610 of unused funds to be carried over to the following plan year. Note that the plan may specify a lower dollar amount (so you’ll want to double-check) and any unused funds in excess of the carryover are forfeited.
Further, your plan cannot offer both a grace period and carryover option — it’s one or the other.
Remember: You can only use your FSA funds for medical expenses from this past year
FSA plans run on a year-to-year basis, so you can only use your FSA funds for expenses incurred during the current plan year (or grace period) and only after the medical service has been provided. You cannot use your FSA funds for expenses from several years ago.
To be safe, make sure to review your plan and talk with the administrator to get the full details, and as always, save receipts for any expenses!
Now that we know when you have to use your funds, let’s talk about how to use them.
2. Create a Strategy to Use Your Remaining Balance in 2024
In order to make the most of your FSA funds before they expire, now is the time to take stock of the out-of-pocket medical expenses you’ve made this year and evaluate what items you may still need to pay for before December 31.
Remember that FSA funds are meant for qualified medical expenses which the IRS says “must be primarily to alleviate or prevent a physical or mental disability or illness.” Common FSA-eligible expenses include a range of medical, dental, and vision-related costs, such as doctor visits, lab fees, over-the-counter items and prescription medications — so if you’ve already paid for pre-approved items or need to schedule routine checkups or even visits with specialists, consider paying for it with your FSA or applying for reimbursement.
Other expenses to consider include capital expenditure, such as installing accessibility features at home (like handrails or entrance ramps) to support a disabled condition, or transportation, such as mileage and parking for travel to receive medical care.
Beyond common expenses, you can also pay for items that aren’t pre-approved — like fitness equipment or air purifiers — if you receive a Letter of Medical Necessity (LOMN) from a healthcare professional. Essentially, the IRS allows doctors to make determinations on behalf of patients, to qualify certain purchases for FSA spending if they are deemed medically necessary.
The challenge can be finding shops where you can use your funds and obtaining a LOMN, which is where Flex comes in.
How Flex Can Help You Use Your FSA Funds
Here at Flex, we make it easy to find FSA-eligible products and pay for them directly with your FSA account.
In our marketplace, you’ll discover both pre-approved products and FSA- and- HSA-eligible brands (which require a LOMN). This includes everything from qualified medical expenses, like orthotics, glasses, and mobility aids, to more specialized items, such as fitness watches, baby items, personal care, and even adjustable beds.
By partnering with Flex, all of the brands in our marketplace offer an easy and seamless way to spend your HSA or FSA funds — whether you need a Letter of Medical Necessity, want to pay directly with your HSA/FSA card, or need documentation for reimbursement. That’s great news if you’re in a use-it-or-lose-it time crunch.
To explore all that we have to offer, check out our marketplace.
Spend Your FSA Funds Before They’re Gone
With health care costs booming, nearly half of Americans said rising out-of-pocket medical expenses and health insurance premiums are the most important issues to them, according to the recent Workforces Report from Aflac.
FSAs are designed to alleviate some of this concern by giving consumers more choice and tax savings too — but only if they are used properly.
To make the most of your FSA this year, take the time to review your plan and plan ahead, before it’s too late.
🚀 Fast Facts: The FSA “Use-It-Or-Lose-It” Deadline
If you have an FSA, December 31 is the deadline to use your 2024 funds.
Start preparing now by reviewing the rules of your FSA and create a plan for how to make the most of the remaining money in your account.
You may be able to use FSA funds on items and services you didn’t expect, if you have a Letter of Medical Necessity.
If you have a Flexible Spending Account (FSA), there’s a good chance you risk losing money come December 31. That’s because for many FSA owners, the end of the year is the use-it-or-lose-it deadline.
In fact, more than half of FSA account holders forfeit funds each year according to the Employee Benefit Research Institute.
We’re not talking about loose change either, the average forfeiture was $441 in 2022 — money that could have paid for medical expenses, or things like a new smart watch or an annual gym membership.
If you’d rather use it (than lose it), read on to learn about the important deadlines and find tips for how to spend your FSA funds before they’re gone.
1. Review Your Plan to Get the Full Details
To start, you want to review your specific FSA account to see when the plan ends because policies can vary.
A quick reminder, FSAs are employer-sponsored benefit plans that let you set aside pre-tax money from your paycheck (which lowers your taxable income) to cover healthcare and dependent care expenses.
This makes FSAs a valuable tax savings tool. According to TurboTax, if you made $50,000 this year and your tax rate is 30%, contributing $2,000 to your FSA account will have saved you $600 on taxes.
FSA deadline 2024: When do FSA funds expire?
Typically, FSAs operate through the calendar year, from January 1 through December 31. However, not all plans are the same and your employer or service provider may have an alternate schedule.
Further, not all funds expire at the end of the plan’s term — there may be ways to extend the use period of your funds.
Possible FSA extensions: Grace Periods, Rollovers, and Carryovers
Employers can, but don’t have to, offer ways to extend the usage of your funds or allow you to carryover cash into the following year.
Here are the potential options:
1. Grace period: About 36% of FSA plans allow a grace period of up to 2 1/2 months. That means that if your plan runs on a calendar year, you will be able to use your FSA funds up to March 15. Further, the plan may also have a “run-out period” which extends the deadline to submit claims another 15 days. In this example, you can submit claims until March 30 for expenses incurred from the beginning of the previous plan year until March 15th — the run-out period simply gives you more time to submit claims for funds spent.
How does a grace period work?
If there is a grace period in your plan, claims submitted during that period are automatically taken out of the prior year's remaining funds. Once those funds are used up, you will then start drawing from the current plan year.
2. Carryover: Plans may allow up to $610 of unused funds to be carried over to the following plan year. Note that the plan may specify a lower dollar amount (so you’ll want to double-check) and any unused funds in excess of the carryover are forfeited.
Further, your plan cannot offer both a grace period and carryover option — it’s one or the other.
Remember: You can only use your FSA funds for medical expenses from this past year
FSA plans run on a year-to-year basis, so you can only use your FSA funds for expenses incurred during the current plan year (or grace period) and only after the medical service has been provided. You cannot use your FSA funds for expenses from several years ago.
To be safe, make sure to review your plan and talk with the administrator to get the full details, and as always, save receipts for any expenses!
Now that we know when you have to use your funds, let’s talk about how to use them.
2. Create a Strategy to Use Your Remaining Balance in 2024
In order to make the most of your FSA funds before they expire, now is the time to take stock of the out-of-pocket medical expenses you’ve made this year and evaluate what items you may still need to pay for before December 31.
Remember that FSA funds are meant for qualified medical expenses which the IRS says “must be primarily to alleviate or prevent a physical or mental disability or illness.” Common FSA-eligible expenses include a range of medical, dental, and vision-related costs, such as doctor visits, lab fees, over-the-counter items and prescription medications — so if you’ve already paid for pre-approved items or need to schedule routine checkups or even visits with specialists, consider paying for it with your FSA or applying for reimbursement.
Other expenses to consider include capital expenditure, such as installing accessibility features at home (like handrails or entrance ramps) to support a disabled condition, or transportation, such as mileage and parking for travel to receive medical care.
Beyond common expenses, you can also pay for items that aren’t pre-approved — like fitness equipment or air purifiers — if you receive a Letter of Medical Necessity (LOMN) from a healthcare professional. Essentially, the IRS allows doctors to make determinations on behalf of patients, to qualify certain purchases for FSA spending if they are deemed medically necessary.
The challenge can be finding shops where you can use your funds and obtaining a LOMN, which is where Flex comes in.
How Flex Can Help You Use Your FSA Funds
Here at Flex, we make it easy to find FSA-eligible products and pay for them directly with your FSA account.
In our marketplace, you’ll discover both pre-approved products and FSA- and- HSA-eligible brands (which require a LOMN). This includes everything from qualified medical expenses, like orthotics, glasses, and mobility aids, to more specialized items, such as fitness watches, baby items, personal care, and even adjustable beds.
By partnering with Flex, all of the brands in our marketplace offer an easy and seamless way to spend your HSA or FSA funds — whether you need a Letter of Medical Necessity, want to pay directly with your HSA/FSA card, or need documentation for reimbursement. That’s great news if you’re in a use-it-or-lose-it time crunch.
To explore all that we have to offer, check out our marketplace.
Spend Your FSA Funds Before They’re Gone
With health care costs booming, nearly half of Americans said rising out-of-pocket medical expenses and health insurance premiums are the most important issues to them, according to the recent Workforces Report from Aflac.
FSAs are designed to alleviate some of this concern by giving consumers more choice and tax savings too — but only if they are used properly.
To make the most of your FSA this year, take the time to review your plan and plan ahead, before it’s too late.
Flex is the easiest way for direct to consumer brands and retailers to accept HSA/FSA for their products. From fitness and nutrition, to sleep and mental health, Flex takes a holistic view of healthcare and enables consumers to use their pre-tax money to do the same.