Though FSA funds must typically be used by the end of the year, the COVID-19 relief package passed last year extends the deadline to March 15th for many plans. What does this grace period mean for your employees? Simply put, this gives your employees more time to use any unused FSA dollars on eligible expenses.
Because Flexible Spending Accounts operate on a use-it-or-lose-it model, the money in the account must be spent by the deadline before it’s completely lost. Some businesses offer additional flexibility with an extended grace period, whereas others allow carryover of a limited amount into the next year. In this article, we’ll walk you through the basics of FSA money, and some creative ways you can encourage your employees to use their bucks before the deadline.
What is an FSA?
A Flexible Spending Account (FSA) is a tax-advantaged financial account through the employer in which your employees can contribute money to, and use the funds to pay for certain types of out-of-pocket health care expenses. These funds can pay for a wide range of health care products and services for employees and even their family members. FSA’s benefit both the employer and the employee -- for employees, they are contributing to additional savings in case they have out-of-pocket costs, and for employers, payroll tax contributions are reduced due to lower taxable income.
If you currently offer FSA options within your company, here’s how your team can spend their unused FSA money before March 15. (For a full list of covered expenses, visit https://www.fsafeds.com/explore/hcfsa/expenses)
1. Over-the-counter medications
Most over-the-counter medications are eligible FSA expenses. This means your employees can expect to use unused funds on medications like:
Cold & flu medicine
2. Medical equipment
In addition to medications, many types of medical equipment can be reimbursed by an FSA as well, including:
Blood Sugar Tests
If it’s time for some new specs, remind your employees that they can use their FSA funds for nearly all types of prescription eyewear (up to a certain amount). Or, if they simply need an annual eye exam or fresh contacts, that’s an option too!
Encourage your employees to get creative with their unused funds -- they can even spend FSA bucks on health-related products, classes, and services that may seem out of the standard boundaries. Here are a few options to look into:
Fitness device trackers
Gym memberships (exclusions apply)
5. Emergency kits/first aid kits
Emergency kits and first aid kits may not be the most “fun” or “creative” way to spend your FSA money, but they can prove to be extremely useful in emergency situations. First aid kits usually come packed with bandages, masks, over-the-counter meds, and even flashlights in case of an outage.
6. Self-care/personal care
With the new year in full swing, encourage your employees to love themselves a little more this year -- this includes taking more time to pamper themselves. FSA bucks can be used for relaxation and self-care tools, like:
7. Dental needs
Has it been a while since you’ve maintained or checked on your pearly whites? Employees can use FSA cash for a variety of dental procedures and necessities:
Dental sealants, co-insurance, co-payment, deductible
8. Travel necessities
With COVID-19 vaccines ramping up and the travel industry likely opening back up later in the year, employees have travel and vacation plans on their minds. The unused FSA funds can help them prepare, with covered expenses on:
Carry-on first aid kits
While Flexible Savings Accounts offer so many benefits for your team members, not every employee knows the scope of covered expenses, and could potentially be losing out on the reserved money. As an HR manager or business owner, you can lead the way by educating your team on creative ways to use FSA dollars, and prepare for some type of communication if you’ve extended the option to your employees. The deadline’s coming up soon -- don’t let them miss out!
Need an effortless way to manage your team’s FSA benefits? Learn more about how GoCo can simplify your processes.
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