Have you enjoyed a great 2023? We hope so! The year is coming to a close in just a couple of weeks, and that means you need to act fast to use any Flexible Spending Account (FSA) funds you may have already designated for eligible health care costs.
‘Tis the season for our patients to ask if their vision-related expenses are eligible for reimbursement through their company’s FSA. These so-called “Flex Funds” are yours to spend, but the U.S. Internal Revenue Service puts specific rules around the different types of products and services that qualify. So, we’re providing answers to some common questions about FSA accounts and how to use them to your advantage.
If you are fortunate enough to have a Flex Fund account through your employer, today is a good day to do a bit of double-checking. Find out what the “expiration date” is when you need to use your funds or risk losing them. For many, that date is December 31. And since you contribute your hard-earned money to this fund all year, you don’t want to let that date pass without using every tax-free penny you’ve saved.
Here are 5 Flex Fact Q&As to make sure you maximize your flex spending in what’s left of 2023:
- Why does my employer offer a Flexible Spending Account?
In the 1970s, the U.S. federal government created Flexible Spending Accounts (FSAs) to help hard-working people save part of their paychecks before taxes are taken out—for the purpose of using that money on healthcare expenses. As an employee, you’re in the driver’s seat on your FSA: You get to decide if you want to participate or not. It’s a good idea to participate, since FSA plans help you save money by spending pre-tax money on things like vision care. The list of out-of-pocket healthcare expenses that qualify for reimbursement under your FSA grows each year. It includes eye exams, deductibles, contact lenses, prescription glasses, and even prescription sunglasses. And the limit you can contribute to your plan also increases each year: The 2023 contributions cap for Flex Fund monies is $3,050 and is anticipated to be $3,200 for 2024. But as with most things, there are rules around how and when you can use those specific funds, and often there’s a date – December 31 – by which you either need to spend those funds on qualifying products and services or you lose them and never get them back. That’s why the term “use it or lose it” is used around flex spending account dollars.
- How can an FSA benefit me?
The FSA is all about putting more money in your pocket to spend on healthcare. The special thing about Flex Funds is that they are tax-free. Meaning, your employer puts the amount you specify as Flex Funds into your Flex 125 account before they calculate your payroll taxes. This means the amount you pay taxes on overall is lower. If you maximize your personal Flex Fund limit and have $3,050 deducted little by little from each of your paychecks over the entire year, you will pay taxes on $3,050 less than your annual take-home salary. And if you have children, the tax savings can be even higher: Check with your human resources manager to ask if you are eligible to participate in a Dependent Care FSA, which has a $5,000 maximum contribution cap per taxable year per household. When you maximize your annual contributions to FSA savings plans, you pay less in taxes and have more money available to spend on healthcare items and services tax-free. Bottom line: If your employer offers a Flex 125 account, participating in it can lower your tax burden while essentially increasing your take-home pay.
- Do I qualify for a Flexible Spending Account?
You don’t have to qualify with a specific income level. If your employer offers an FSA benefit to its employees, then you are eligible to participate. But once again, it’s a choice you make, not something that is forced upon you. Your HR manager will share the details of your FSA benefit, and you must “opt in” to participate. If you don’t know whether your employer offers this type of benefit, ask! It’s worth exploring, because it can save you money in the long run.
- What expenses qualify for Flexible Spending funds?
Many healthcare expenses that you now pay “out-of-pocket” qualify for reimbursement with FSA funds. For example, when you visit your optometrist for vision care during your annual comprehensive eye exam, you can spend Flex Funds on the following expenses:
- Annual eye exam
- Deductibles and co-pays
- Prescription glasses
- Computer glasses
- Reading glasses
- Contact lenses
- Prescription sunnies
- Dry eye treatments
- Designer frames (but only if they have prescription lenses in them)
- Prescription medications
And, when you go to the pharmacy, your Flex Funds can be used for over-the-counter expenses related to eye health. These include eye drops, contact lens solutions, cases and cleaners, many types of vitamins — even products that can help you quit smoking (which benefits your eyes and overall vision health).
- Where can I go to use FSA funds on vision-related expenses?
We’re glad you asked: It’s as easy as visiting our office! Each member of our vision care team is knowledgeable about our wide selection of frames for your new prescription glasses or prescription sunglasses, and they can also help you order a year’s worth of contact lenses. There are many vision-related expenses that qualify for using your outstanding FSA funds.
It’s a busy season in our office – you’re not the only one who just realized that it’s time to “use it or lose it” where Flex Funds are concerned. Call us today to schedule an appointment to come in and explore the possibilities. Don’t wait until it’s too late – time is on your side today, and we want to make sure you don’t lose your FSA funds when the clock strikes midnight on New Year’s Eve.