Deciding how to set money aside for healthcare expenses presents a choice: You can pad your regular savings account, or contribute to a flexible spending account (FSA).
The advantage of funding an FSA is that your money goes in on a pre-tax basis. So if you contribute $1,200 to your FSA, that’s $1,200 of income you won’t pay the IRS taxes on.
The drawback of FSAs, however, is that they often operate on a use-it-or-lose-it basis. You generally need to commit to an annual FSA contribution ahead of a new calendar year, and making changes to it is limited unless you undergo a qualifying life event, like a marriage or divorce.
Some FSAs allow carrying a limited amount of money from one year to the next, while others come with a grace period that allows using up the balance a few months into the new year. If your FSA lacks these features and you have a chunk of money left in the account, you risk losing it, which you’ll want to avoid. Instead, consider creative ways to use up your balance. The following items are considered FSA-eligible expenses.
1. A fitness tracker
Some cases allow a fitness tracking watch or device to count as an FSA-eligible expense but require a doctor’s letter of medical necessity. This might happen if you’re medically overweight or have a condition that can be managed by exercise.
Featured offer: save money while you pay off debt with one of these top-rated balance transfer credit cards
2. Cold and allergy relief
Remaining FSA funds can cover over-the-counter cold and cough remedies, decongestants, nasal sprays, and throat lozenges.
You can also use the balance to pay for contact lens solution and drops for dry eyes, in addition to contact lenses, prescription eyeglasses, and sunglasses.
4. Menstrual products
Stock up on tampons and pads as these count as eligible expenses.
5. Sunscreen
Stock up on sunscreen as it is considered an FSA-eligible expense, especially if you have kids who go through sunscreen quickly during the summer.
Don’t give up money that’s rightfully yours. If you don’t have prescriptions to refill or medical appointments to attend, consider making these purchases to spend down your FSA balance before 2023 ends.
These savings accounts are FDIC insured and could earn you 11x your bank
Consider our picks of the best online savings accounts that could earn you 11x the national average savings account rate. Click here to find the best-in-class picks for 2023.