If you enrolled in a flexible spending account (FSA) as part of your health coverage in 2010, now is the time to consider how you can use your savings wisely. The "use it or lose it" principle applies to these savings plans since your salary deferrals are forfeited after March 15th of the year following enrollment.
It's also important to take note of new health care regulations that limit the over-the-counter medications that are eligible for reimbursement through your FSA starting in 2011. Health care legislation passed in March 2010 mandates that in 2011 FSA dollars can no longer be used to cover most OTC drugs without a prescription. That means if you're used to using your FSA to purchase common allergy meds such as Claritin, acid controllers like Pepcid AC or even common cold and flu remedies like Robitussin, you'll need a prescription.That also means that now-before December 31-is a great time to stock up.
Pharmaca stores serve as a great resource for those with an FSA. We can accept FSA debit cards at our register for easy transactions. We also provide customers with a receipt showing which items qualify for reimbursement. To further take the guesswork out of the process, we developed some tips below to help you get the most out of your health savings in the coming weeks.
Stock up on essentials
By purchasing eligible products with your pre-tax dollars, you can save approximately 20 to 40 percent on out-of-pocket health expenses. Stocking up on basic health care items--like Advil, Benadryl, hydrocortisone and antacids--makes good use of your extra savings since you are likely to need them in the future.
Clean out the cabinet
Now is the perfect time to clean out your medicine cabinet. Appropriately dispose of any expired medications (call your city to find out about disposal programs) and replace them with new ones. Note how much you've used and buy accordingly.
Plan for next year
What's in your future? If you know of any upcoming events, start planning for them now with your FSA purchases. For example, if your New Year's resolution is to quit smoking, you can use your savings for smoking deterrents like Nicoderm. If you are hoping for a new addition, pregnancy kits and prenatal vitamins are eligible expenses. Even big vacation plans might warrant the advance purchase of Dramamine.
Other things to consider:
- In 2011, FSA debit cards will no longer work for purchases of the ineligible items, even if you have a prescription. You'll need to pay for these items out of pocket and submit a reimbursement claim.
- These restrictions go into effect on January 1, even if your employer allows a grace period for you to continue using up the previous year's FSA balance. So start stocking up on your regular OTC meds now!
- As you plan for the next year, make sure you adjust your FSA spending budget accordingly. Don't lose money at the end of the year!
Read more about the new restrictions at irs.gov. (Click here to see a probable list of eligible and ineligible expenses.) And as always, feel free to ask a Pharmaca practitioner for health advice or product recommendations.