Personal Finance News Monday 11/19

Phil's Personal Finance Tip of the Day:
Money Still in Your Flex Account? Use it or Lose it
By Susan Johnston | U.S.News & World Report LP – Mon, Nov 19, 2012 2:23 PM EST

As the year draws to a close, many employees with a flexible spending account (FSA) for medical expenses will rush to the doctor or dentist to use up any remaining funds. For the uninitiated, FSAs allow employees to set aside pre-tax money to pay for qualified medical expenses, but at the end of the plan year--or two-and-a-half months into the following year, if the employer offers a grace period for FSAs--the employee forfeits any money left in the account. However, money in health savings accounts (HSAs) carries over from year to year.

[Read: Major Health Reform Changes Effective in 2012.]

"Typically, what people are going to do is schedule any medical procedures that they can, particularly elective procedures," says Matt Thomas, president of WorkSmart Systems, an Indianapolis-based professional employer organization. "A big one would be things that have to do with vision: if they need to get classes or contacts, or if they're interested in getting a LASIK procedure."

Here's a look at ways to use up FSA dollars and how FSAs will change next year:

Utilizing FSA money. Jeremy Miller, president and founder of FSAstore.com, a New York-based online shop dedicated to selling FSA-eligible products, says now is a good time to check FSA balances and pending transactions before creating a strategy for how to spend what's left.

But before you rush out to the drugstore and load up your cart, Tami Simon, managing director of knowledge resources for Buck Consultants, recommends reading your employer's summary plan description so you know what is and isn't eligible for reimbursement. "Eligible expenses are those things that are specifically linked to medical care--things like a blood pressure monitor, a blood sugar test kit and test strips, a breast pump for lactating mothers," she says. (Lactation supplies became eligible for FSA reimbursement last year.)

Items purchased for preventative care, such as a gym membership or an electric toothbrush, or for cosmetic purposes, including cologne and tooth-whitening strips, are generally not reimbursable.

Over-the-counter (OTC) medications previously qualified as FSA-eligible expenses, but as of Jan. 1, 2011, the IRS excludes OTC medications (except for insulin) unless the patient gets a prescription from his or her doctor.

To read the entire article from Susan Johnston | U.S.News & World Report LP:http://finance.yahoo.com/news/money-still-flex-account-lost-192336365.html

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