When it comes to flexible spending accounts (FSAs), you use it or lose it. That's meant the 30 million Americans who have paid into their FSAs have left about $450 million of tax-free money unclaimed by the time the deadline rolls around, according to Jeremy Miller, founder and president of FSAStore.com, a one-stop shopping site for FSA-friendly products and services.
Most of this unspent cash goes back to those who don't exactly need it: your employers. To make sure you're making the most of your FSA, here are four steps you can take.1. Find Out the Exact Deadline
Most companies require that you spend down your account by Dec. 31. However, some companies offer a grace period of the first three months of this year. That means you have until March to take care of yourself and your family with 2010 dollars.
2. Get the Paperwork in ASAP
While the grace period may take you into the middle of March, the date to file all your reimbursement requests may be sooner, warned Josh King, general counsel at Avvo.com, a free website that rates and profiles doctors and lawyers, in an email interview with WalletPop.
Pore over your health insurance claims. "Are there any co-pays, co-insurance payments or the like that you haven't gotten reimbursed from your FSA?" King asked. "Now's the time!"
3. Check and Double Check
Your balance, that is, whether your deadline is March or December, recommended Bob Meighan, vice president and CPA at TurboTax. In addition, keep track of what you're claiming so you're not one of those consumers who contributes to the $450 million left unspent.
4. Know What Gets Covered
You may need a prescription for over-the-counter drugs nowadays, but there are still many other things you can get reimbursed for. Setting aside less than last year because of this change is a mistake, said Miller. "There are 24,000 products that fit the FSA requirements, from first aid to family planning, and FSAStore sells 4,000 of those products."
Many FSAs will also cover travel expenses for a doctor's visit, contact lenses, dental check-ups and programs to stop smoking, drinking or taking drugs.
Check out our story in November for even more items covered by your FSA.
Four Steps to Maximize Your Flexible Spending Account