One quick tip to use up your flexible spending account

With a Flexible Spend Account (FSA), you use pretax money to pay for medical expenses. But these accounts have a “use it or lose it” rule. Here is my quick tip to help you use up your flexible spending account at the end of the year.

If you are part of a employer-provided health insurance plan, you may also be able to sign up for Flexible Spending Account (FSA). Each pay period, money from your paycheck is put into a separate account for you to use to pay for allowed medical expenses. You also save additional money on these medical expenses because they are made of “pre-tax funds”.

You can use your FSA to save on big medical expenses such as contact lenses and glasses, as well as your copays. At the end of the year, you probably have some money left you need to use up, or you will lose it.

Bathroom medicine cabinet that you can fill up when you use up your Flexible Spending Account

The Use it Or Lose It Rule of Flexible Spending Accounts

It’s one of the downsides of this FSA account. You need to use up the money at the end of the year. The unused money doesn’t carry over year over year. There’s likely a grace period in the plan that allows you to use the money early in the new year. Double check with your plan provider to confirm the dates for both spending the money and making any reimbursement requests.

If you think you have already completed all of your regular medical expenses for the year, run to your local drug store and buy a a few (approved) items to finish off the remaining balance. If you have a debit card for your FSA account, this process will go much faster and easier.

Remember, you can only buy items that are allowed as part of the FSA program. For anything else, you’ll be asked to pay out of pocket. The checkout computer will know what’s tagged for FSA and what is not.

You should be able to swipe your FSA debit card for the allowed amount only, and then provide a secondary payment method for anything additional. I usually try to keep my purchase to only FSA-eligible items to avoid any confusion or trouble.

One quick tip to use up your flexible spending account

Don’t try guessing what you can and cannot buy. Trust me, I tried this and ended up at the checkout with ineligible products. The cashier was confused when I asked him to check what was considered a FSA allowed item. And then asking him to remove the ineligible items made the whole process even messier.

Avoid repeating my headache. Arrive at the checkout counter confident you have the right FSA eligible items.

To endure you have the right items, use the drug store’s website and check in the product catalog what is tagged as FSA eligible. Let the pharmacy guide you in what you can buy.

I tried assuming in the past that all products in a category (such as eye drops) would be allowed, but they were not. Use the store’s website instead to figure out what you can buy. In the case of eye drops they need to be related to contact lens use only, not regular eye drops. 

A few years ago regular “over the counter” medications were removed from the plans, and then added back in for 2020 as part of the CARES act. Keep an eye out for any rule changes or nuances with the program you participate in. To save the hassle I look for items that are allowed without needing additional documentation.

Tip: You should also cross reference any items with your FSA plan site. Just because the drug store website says it’s allowed, you may need to demonstrate a medical need in order to use FSA money to buy it. There are many items you can buy without a doctors note, while others require a note to confirm it’s medically necessary. You can’t just spend your money on anything “medical”.

How to use up your FSA at your local drug store

For Rite Aid website, check out their “Shop” section. In the left column of the product page, there is a filter in the Deal Type section for “FSA”. This will only display FSA eligible items.

On the CVS website, there is a section specifically for FSA items. Click on the “Shop all Categories” followed by FSA to find the right items.

For the Walgreens website, look under “Shop” and choose “Medicines and Treatments”. In the lower left side of the page is a FSA checkbox. Tip: also choose “In stores” if you’re going to your local store to spend your FSA balance.

If you are shopping at a different drug store, follow the ideas above. Look for product filter options that allow you to see only FSA items. In the last few years I started seeing more of these options added to websites. I suspect they had the same idea that I had. People have money they need to spend, so help them spend it easily and correctly.

One important note about using up your FSA balance

As mentioned above, double check on your Flexible Spending provider’s website to ensure you are eligible for all of the medical-related products. In some cases you may need a doctor’s note in order to use the money. If you spend FSA money you should not have, you’ll likely ned to repay it.

Regular band-aids are usually fine, but it’s better to double check the program limitations before buying an item and having to fix it later.

Over to you, what other tips do you have to use up your flexible spending account?

Instead of losing your FSA balance as the grace period ends, use the remaining balance to purchase extra items to stash in your closet from your local pharmacy. You set aside the money for this purpose, so you should spend it. Use the store’s website to guide you to what is tagged as eligible so you don’t have to guess. Running to your local pharmacy allows you to quickly finish off your account for the year.

Looking for more tips to save you money?

Pin for later

1 easy tip to use up your flexible spending account