If this is your first year having a Flexible Spending Account, listen up. A Flexible Spending Account is a mechanism offered by employers and the IRS to take some of your pre-tax earnings and place them in an account that can be used for your health care needs. You don’t have to pay any income tax on that money, and if you need to use it before you’ve paid into it, you can do that, too. The biggest drawback is this: if you don’t spend everything in your account by the end of the year, the money reverts to your employer. You either “use it or lose it”.

In order to avoid having this happen to you, take a minute to review what you need that might be eligible.

Medical treatments, supplies, and devices that are covered under the Flexible Spending Account are the same as those described in IRS Publication 502, Medical and Dental Expenses. You can order that publication from www.irs.gov. Read below to find the best use of your FSA dollars in the limited time available this year.

1. If you have procedures coming up, try to get them scheduled before the end of 2010. At least see your doctor and your dentist and use up some of those FSA dollars in a checkup of your health. Screenings for cancer and other lab tests are covered, as are teeth cleanings and orthodontia. Get whatever you need, and let your co-payments bring your FSA balance down.

2. If you are perfectly satisfied with your eyeglasses prescription, why not have another pair made up in case you lose or break your current pair? In some cases, this one purchase could wipe out your entire FSA balance.

3. If there is still money left, you could stock up on your prescriptions, if they don’t expire too quickly. You will have another FSA next year if you choose, and your regular meds will always be covered. If you’re in the drugstore already, you might as well get a flu shot too to protect you and your loved ones from this year’s flu. Most drugstores and even many grocery stores are offering flu shots.

4. Take care especially to stock up on non-prescription items like aspirin, antacids, cough syrups and cold remedies, itch cream and nasal sprays. Things are changing in the kinds of products and treatments that will be eligible for reimbursement in the future. In the next round of FSA eligibility, many over-the-counter remedies will require a doctor’s prescription, even stop-smoking remedies. So if you need any of these items, get them now while they are still on the eligibility list. An important OTC exception is insulin and diabetic supplies, which need no prescription.

5. Take into account the rules change for next year when you fill out paperwork for a new account. Your employer will deduct any amount you direct them to take out of your regular paychecks; be sure you estimate how much you will need very carefully. It makes sense to underestimate your expenses if you used your FSA account to buy over-the-counter medications this year. Do not let your employer deduct more than you will be able to spend, or you could lose that money forever.

Sara Roberts is a content contributor for Just Eyewear, a prescription eyeglasses and prescription sunglasses retailer.

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patient with dentist

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flu vaccine

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over the counter drugs

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