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Flexible Spending Accounts: Use It Or Lose It

Flexible Spending Accounts

It’s November (as I write this) and there are just a few weeks left in this year. With the holidays in the mix, this year will be over before you know it. For those of us with health “flexible spending accounts” (FSA) that means there is not a lot of time to use that remaining balance before it goes POOF and magically vanishes into the pockets of the company that manages your account. It’s “use it or lose it” time!

What is it?

These are accounts approved by the IRS to create a way for you to pay for your out-of-pocket health care expenses with pre-tax dollars. That means you ultimately get more health care for your dollar (since Uncle Sam doesn’t take a share- similar to how an IRA works), so it’s a great idea to participate in one of these plans if your employer offers one.

Use it or Lose it

Unfortunately, these plans do have a limitation- the “Use It or Lose It” rule. At the end of your “coverage period” (typically the end of the calendar year) you have not used your entire deposited balance on health-related expenses your money vanishes! Well, sort of… you typically will have a grace period of a few weeks to submit claims, but the expenses typically must have occurred during the calendar year.

What Can You Spend it On?

Well, first of all, you may spend it on acupuncture! According to IRS Publication 969 you are able to use spend the money on any qualified expense as listed in IRS Publication 502. That means acupuncture treatments are qualified. Check out the complete list in Publication 502 if you are unsure if a particular expense is qualified, or check with the company that hosts your FSA.

Other Types of Accounts/Arrangements

There are other kinds of tax-deferred accounts such as HRA (health reimbursement arrangement) and HSA (health savings account) that exist. These work differently than a flexible spending account. One difference is the lack of the “use it or lose it” rule- the money will roll over from year to year. Nevertheless, you should also be able to use these types of accounts to pay for acupuncture as per IRS Publication 969.

To see if acupuncture might be right for you, give us a call at our Durham location or you may call us at 919-228-8448. If you find it easier to make an appointment online, you can simply click here to use our online schedule to set up a free face-to-face consultation.