As the end of the year rolls closer, I’m going to begin a healthcare series that details some of the most common health expenses and ways to reduce them. Up first, the Flexible Spending Account (FSA).
In case any of you have felt the pinch due to the new FSA rules instituted this year, here are few ways you can still make yours work just as well as it has in the past:
Antibiotics:
In the past, you were free to use your FSA money to purchase non-prescription drugs at any pharmacy, Wal-Mart, or Target of your choice. Baby is sick? Bring on the Children’s Motrin! Have a headache? Buy some Tylenol and submit the receipt for a full reimbursement! Enter 2011, the year of no more non-prescription coverage. However, as any savvy PF Blogger or reader has hopefully already discovered, there are ways around this–if you have your health care provider write you a prescription for the medication you need, you can still submit it through your FSA (just make sure to provide either a copy of the Rx or a receipt that lists the Rx code on it). The beauty of this supposed loophole? The pharma companies still want you to buy their drugs, so many have made OTC drugs available from BEHIND the counter. Just don’t try to cheat this process as penalties for non-qualifying expenses are steep–if you’re caught using your FSA for non-qualifying expenses, the total amount of these purchases will be added to your gross income and will be taxed an ADDITIONAL 20%! Honesty is the best policy with this, folks–if you can’t get an Rx for it, don’t try to use your FSA to pay for it.
Bankable limits:
Be aware that while your employer may have continued to let you contribute a fat $3-4K to this year’s FSA, the story is much different in 2013. Starting January 1, 2013, all FSA contributions will be capped at $2,500. Moral of this story? If you have any big-ticket health expenses on your horizon, it would be in your best interest to schedule these procedures in 2012. Also, you may want to experiment with contributing less to see what this new mandate will do to your bottom (and how you should be budgeting to account for any potential impact).
Children:
In the past, FSA reimbursements could only be applied to medical care for children who were claimed as dependents on their parent or guardian’s tax returns. 2011 saw a wonderful expansion of this definition and current mandates now allow for any child who is under the age of 27 to be covered through their parent’s FSA. The silver lining in this change is the fact that your children, even if they don’t live at home, can still be covered by your FSA! Just remember that you can’t use the FSA money to pay for medical premiums, even if they are for your children.