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If you have unspent money in your healthcare flexible spending account, now is the time to make a plan to use it before you lose it.

Healthcare FSAs allow workers to set aside pre-tax money for eligible expenses. However, these are generally “use it or lose it” accounts: unless your company provides a grace period or allows you to rollover funds to the next year, the standard deadline for spending the money is December 31 of the year you pay the dues.

The good news is that even if you don’t have any medical needs to spend the funds on – i.e. doctor’s appointments or prescription drugs – about $1,600 is spent each year by households for healthcare products that could otherwise be purchased with FSA dollars, according to FSAStore.com. That means you’re likely to find a way to spend the money on things you’ll end up buying anyway.

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“We urge all FSA users to check their balance today and plan to spend their remaining funds before the time runs out,” said Shawna Hausman, Chief Marketing Officer of Health-E Commerce, parent company of FSAStore.

The RTA contribution limit this year was $2,850 and in 2023 it will be $3,050.

Even with a deferral or grace period, confiscations happen

About a third of companies, 36%, give a 2.5-month grace period to spend the money, and 42% let you carry a limited amount over to the next year, according to the Benefits Research Institute. employee social. For the remaining 23% of businesses, you lose the remaining funds in your account after December 31.

However, being allowed to carry over funds — a limit of $570 this year — or getting a grace period doesn’t necessarily mean avoiding forfeiture.

Among workers allowed to carry over money, 49% end up losing some or all of it, according to EBRI. For those who benefit from a grace period, this share is 37%. Additionally, 48% with a traditional deadline of December 31 also lost money, EBRI found.

“Account holders stand to lose about $1 billion…until the December 31 deadline,” Hausman said.

A variety of products qualify for FSA money

The list of qualifying expenses eligible for FSA money is longer than before, due to congressional action in 2020. For starters, over-the-counter drugs no longer need a prescription to be eligible. This includes things like cold medicine, anti-inflammatories, and allergy medicine.

Additionally, menstrual care products are now eligible, as are items that have become relevant during the pandemic: home Covid tests, masks, hand sanitizer and other personal protective equipment used to fight the virus.

Other eligible products include sunscreen, thermometers, eye care products, baby monitors and pregnancy tests. FSAstore.com has a list of eligible items if you are unsure if something would qualify.

Be aware that the IRS doesn’t allow stockpiling, which generally means you can’t buy more of one product at a time than you can use in that tax year. The details, however, are determined by FSA administrators.

If you are unsure of the rules applicable to your FSA, contact your company’s human resources department. Alternatively, you can check your online FSA portal (if your company has one) for more information. There should also be a phone number on the back of your FSA debit card that you can call.

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