As the year winds down, it’s time to think about the often overlooked aspect of financial planning: your Flexible Spending Account (FSA). For many, making the most of every financial tool is essential to staying on top of your finances. 

Your FSA is one of those tools, but like many things in finance, it comes with deadlines. Most FSAs operate on a “use it or lose it” basis, meaning that if you don’t spend the funds you’ve set aside for eligible health expenses, you could lose them. However, this year there’s a little relief. 

Employers are now allowed to let employees carry over up to $640 of unused FSA funds into 2025. Let’s dive into how you can maximize your FSA funds before they disappear and discover some lesser known eligible expenses that can help you squeeze the most out of every dollar.

What is an FSA and Why You Should Care About It

An FSA is a pre-tax account set up by your employer that allows you to pay for eligible medical expenses. The money you contribute to this account is tax-free, which means you save money on health expenses. 

But here’s the catch: in most cases, if you don’t use the money by the end of the year, you lose it. It doesn’t carry over unless your employer has a carryover provision or a grace period (more on that later).

For someone who’s dedicated time and effort to their financial plan, watching unused FSA funds go to waste can be painful. During this time of year I am continuously reminding clients not to overlook their FSAs.

Deadlines and Carryover Provisions

Know Your FSA Deadlines

First things first: know your deadlines. Each employer’s FSA plan can differ, so don’t assume you have more time than you do. Some FSAs require that you use your funds by December 31st, while others may offer a grace period, typically extending into the first couple of months of the next year. 

Check with your HR department or benefits provider to be sure you know the exact deadline for spending your FSA dollars.

Carryover Relief for 2024-2025

Now for the good news. This year, you can carry over up to $640 of unused FSA funds into 2025. If your employer offers this option. 

That’s up from the previous year’s $610. If you find yourself with some money left in your account as the year ends, this carryover could be a lifesaver.

Understanding if your employer offers a carryover option. It is essential for FSA planning this year and next year as well. 

While the carryover is a great benefit, remember: anything over $640 will still be forfeited, so you’ll want to use as much as possible by year’s end.

Make a Plan for Your Health-Related Expenses

Routine Health Appointments

One of the easiest ways to spend your FSA dollars is on routine health care. Busy schedules often mean that health check-ups are pushed to the back burner, but your FSA gives you a great incentive to prioritize these appointments.

Consider scheduling:

• Annual physicals
• Dental cleanings and exams
• Eye exams (and, yes, even prescription glasses or contacts)
• Specialist visits if you’ve been delaying them

These services are all FSA-eligible and can be a great way to take care of your health while maximizing your benefits. Think of it as an investment in your well-being that pays off both now and in the long run.

Health Products and Supplies

Your FSA doesn’t just cover doctor visits. There’s a whole list of medical supplies and over-the-counter (OTC) medications you can purchase using your FSA funds. Here are a few examples:

• Bandages and first-aid supplies
• Sunscreen with SPF 15 or higher
• Contact lens solution
• Pain relievers and allergy medications
• Blood pressure monitors

For example, leftover FSA funds can be used to create an “emergency preparedness” kit with medical supplies, pain relief, and a blood pressure monitor. Not only will you use up your FSA funds, but also feel better prepared for any health related emergencies.

Lesser Known Eligible FSA Expenses

Here’s where things get interesting. Many people don’t realize the wide range of expenses that are FSA eligible. Let’s look at some lesser known expenses that might help you use up those remaining funds.

Mileage for Medical Appointments

Did you know you can claim the mileage for travel to and from your eligible health care visits? This includes trips to the dentist, optometrist, or any other FSA eligible care provider. 

It’s a small but often overlooked detail. Keep track of your miles, and this can add up, especially if you live far from your healthcare providers.

Transportation and Parking

If you take a bus, train, taxi, or rideshare to your medical appointments, those transportation costs can also be reimbursed through your FSA. Plus, you can claim parking fees related to medical visits. 

I know a lot of people don’t think to save these receipts, but this can make a real difference, especially if you have frequent appointments or use services like Uber or Lyft for travel.

Not to mention if you are in a situation where you are use it or lose it, you can request reimbursement for these expenses. 

Payment Processing Fees

This one surprised me the first time I came across it: payment processing fees associated with paying for eligible medical expenses can also be covered by your FSA. So, if your healthcare provider charges a credit card processing fee or any other fee related to payment, those are reimbursable through your FSA.

Sales Tax, Shipping, and Handling Fees

Here’s another hidden gem: sales tax, shipping, and handling fees on eligible items can also be covered by your FSA. If you’re ordering medical supplies or health products online, make sure you include the full cost, including shipping fees, when submitting for reimbursement.

You can find a full list of eligible FSA expenses here.

Future FSA Planning for High Earners

As a high earner, you want to ensure that your FSA works for you, not the other way around. Let’s talk about how you can plan for next year’s FSA contributions and avoid overcontributing.

Estimate Your Health Costs for Next Year

Take a look at your health spending over the past year. Were there unexpected medical expenses? 

Did you or your family members have regular health care needs that will likely continue? This can help you decide how much to contribute to your FSA next year. 

You want to avoid leaving too much money on the table but still contribute enough to cover your expected medical expenses.

Coordinate With Other Health Accounts

If you also have a Health Savings Account (HSA) or other medical expense accounts, plan how you’ll use each one. While an FSA is often more limited in terms of eligible expenses and deadlines, an HSA offers more flexibility and long-term benefits. 

Work with your financial planner to create a coordinated plan for using your accounts in the most tax efficient manner.

What’s Next: Maximize Every Dollar

Unused FSA funds don’t have to go to waste. By knowing your deadlines, taking advantage of the $640 carryover provision, and getting creative with eligible expenses, you can make the most of your FSA before the year ends. 

Whether it’s a routine check-up or stocking up on health supplies, there are plenty of ways to put that money to good use. Don’t wait until the last minute, start planning today. 

If you need help evaluating your health care expenses or how your FSA fits into your overall financial plan, consider scheduling a check-up with your financial planner. 

You’ve worked hard to earn your money; let’s make sure none of it goes to waste.