IQ expert Jason Beans: Clock is ticking on FSA expenditures for 2011

Jason Beans

Q: I have a flexible spending account (FSA) at my job. The year is drawing to an end, and I haven’t used all of the money. If I don’t, I lose it. What are some tips for quickly using the money before the calendar year ends? Is there any way to roll over the money or extend the deadline to use the money in January if I run out of time?

A: You may be among many people scrambling to use up their flexible spending accounts. Why? In 2011, the federal government changed what are considered eligible FSA expenses. No longer can you get reimbursed for over-the-counter drugs and medications, unless a doctor specifically prescribes them.

Despite this significant change, an FSA — a savings account that lets employees contribute a portion of their payroll earnings pre-tax for certain medical expenses — still can be a good way to save you some money. However, too often people over-budget.

Buying a new pair of eyeglasses is one way to spend money that’s left in your FSA.

You are correct in stating that the money you allocated at the beginning of the year for medical expenses must be used for services provided that same year. Note, however, that sometimes there can be exceptions to that rule. Check with your human resources department or plan administrator to find out whether your plan has a grace period that allows you to submit claims after Dec. 31.

If your company does not have a grace period, then your company is like most with a “use it or lose it” FSA plan. Here are a few tips to help put your hard-earned money to work before the year ends.

• If you haven’t already done so this year, book your routine annual physical.

• Schedule another teeth cleaning.

• Buy a new pair of prescription glasses, sunglasses or contact lenses.

• Speak with your physician about writing a letter of necessity for over-the-counter items previously reimbursable by FSAs, such as antacids, decongestants, cough medicine, aspirin and bandages.

• Stop procrastinating. If you’ve been putting off dental work or eye dilation, now is a perfect time to get those two things done.

• Search for unclaimed expenses. If you haven’t stashed your receipts away in one spot, then you may end up finding expenses that have gone unclaimed. Search your credit card and bank accounts to track your medical spending.

In preparation for 2012, don’t defeat the purpose of an FSA. Reflect on your experience this year and see how much money you realistically need to contribute tax-free next year.

It’s always good to err on the conservative side so you’re not left with a sizable kitty at year’s end, ultimately losing the tax savings and your remaining money. Remember that after your health insurance plan’s open enrollment period ends, there are a few circumstances (marriage, divorce, birth of a child) that will let you adjust your FSA choices.

It’s important to note that 2012 is the last year that FSAs will have no limits. In 2013, there will be a government cap of $2,500 placed on FSA contributions.

Jason Beans is CEO of Chicago-based Rising Medical Solutions, a medical cost containment/care management company serving the workers’ compensation, group health, auto and liability markets. Beans founded Rising in 1999. Since then, Beans has received a number of honors, including Business Council Advisory Man of the Year and Midwest finalist for Ernst & Young Entrepreneur of the Year. Rising has appeared several times on the Private Company Index’s Top 10 Growth list and Inc. magazine’s Inc. 5000 list.

Beans earned a master’s degree from MIT’s Entrepreneurial Masters Program and a bachelor’s degree in finance from Boston College.

For more information, visit www.risingms.com.

If you have a health insurance question for Jason Beans, please send it to john.egan@insurancequotes.com.