Still Have Money in Your Flex Spending Account? Here's How You Can Spend It Down

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The clock is ticking to use up the funds in your flexible spending account.

FSAs, both health and dependent care, are offered by employers as a way for workers to save money on qualified expenses. The money is set aside pre-tax, but generally must be used by Dec. 31 or forfeited back to employers.

You can contribute up to $2,750 in 2020 and 2021 in health-care FSAs and up to $5,000 in dependent care accounts. As the names suggest, health accounts are for medical expenses. Dependent-care accounts are for childcare for children under the age of 13 and other qualified relatives who are a claimed as a dependent on the worker's taxes

This year, you may find yourself with money still left to spend, thanks to the coronavirus pandemic. Child care centers temporarily shut down early in the crisis. Doctor visits are being postponed.

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In May, the IRS allowed workers to change their contributions if they felt they weren't going to be spending as much money as they expected. However, those new guidelines were optional for employers to implement. In fact, 50% of FSA users will have more funds to spend in the deadline period than they did last year, according to research from, a website for eligible products.

Yet there is some good news. The mid-year rule change by the IRS expanded its list of eligible items for health-care accounts. You can also carry over as much as $550 into 2021 in those accounts, up from $500, or you may have a grace period of 2.5 months into next year to use the funds. However, these are also optional for employers.

"While mid-year rule election changes may give some individuals more flexibility to carry over FSA funds into 2021, approximately 25% of account holders do not have this option and will have more money than usual left in their account to spend down," Rida Wong, president of Health-E Commerce, parent company of, said in a statement.

What to do first

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It's important to know what type of FSA you have, said Kim Tippens, senior director of benefits accounts at Willis Towers Watson, a benefits consulting firm.

"Understanding how to navigate your plan is important," she said.

In general, full-purpose health-care FSAs allow most qualified medical expenses, while limited purpose FSAs restrict allowed costs to dental and vision.

Once you are aware of what you can use it for, find out how much money you have left in the account. Then, ask your employer about the timeline. Do you have to use it all by Dec. 31? Do you have a grace period or the ability to roll over $550?

"If you are putting off a doctor's appointment because of Covid but the FSA allows you to spend that money into February or March, you may be able to plan it for a health visit," said Brian Walsh, a certified financial fiduciary and financial advisor at Walsh & Nicholson Financial Group.

Bare in mind that you may have some unsubstantiated expenses.

That happens when you possibly have an FSA debit card transaction that you are required to substantiate as an eligible expense, Tippens explained.

"Determine if you have any of those," she said. "Do your best to get the documentation your administrator needs and understand what happens if you don't do that."

You may wind up getting the amount deducted from your pay to reimburse them.

When it comes to dependent-care FSAs, make sure the money you spend is for services rendered in 2020. In other words, you can't pay ahead on a January bill in December and expect it to qualify.

What to spend it on

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Now can be a good time to stock up on over-the-counter medications. In years past, you needed a prescription, but thanks to the rule change, one is no longer needed. Menstrual care products, like tampons and pads, are also now allowed.

You can also use the money towards visual-care products — such as contact lenses, contact lens solution, and glasses — acupuncture, a service animal and pregnancy tests, among others. The full list of eligible items can be found on

Here are five other suggestions from

  1. Get a flu shot.
  2. Upgrade medical supplies, such as thermometers and heating pads.
  3. Buy an at-home Covid-19 test kit.
  4. Get everyday essential items, like athletic tape, first-aid kits and sun and skin care products.
  5. Manage your health and wellness with a high-tech health device, like a wireless blood pressure monitor or baby health monitor.

Dependent-care FSAs are most commonly used for day-care expenses.

Lesser known categories of coverage include day camps, elder care, babysitting that is work related, transportation, and household services, such has housekeeping, that are performed by a household employee also providing care for a qualifying dependent.

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