How to make the most of leftover FSA dollars


An FSA, or “Flexible Spending Arrangement,” is an employer-offered benefit that allows you to set aside pre-tax money from your paycheck for health care costs for the coming year.

Being able to use pre-tax dollars to pay for medical expenses sounds like a no brainer, but FSA plans come with one major caveat: the funds in an FSA are “use it or lose it,” meaning any unused funds in your account at year’s end can’t be used in the coming year.

If you over-invested in last year’s FSA, don’t fret yet.  According to Consumer Reports, some companies’ FSA plans have a hard deadline of December 31 for using FSA dollars.  However, other companies allow an additional two-and-a-half-month grace period to empty your account or let you carry up to $500 over into the next year.

According to Nerd Wallet, your FSA likely has one of these options for spending excess money, but it won’t have both – that’s not allowed under IRS rules.  So if you didn’t spend all you allotted last year, an important first step is to check with your company’s HR department to see which – if either – of these options is available to you.  If your company adheres to a December 31 deadline, unfortunately, you’re out of luck. If your company offers a rollover option, you have all of 2020 to use those funds (up to $500, that is).

But if your company offers a two-and-a-half month grace period, that means you have until around March 15.  If you don’t have any planned major medical expenses coming up, you need to think about how to use that money before it disappears.



Most people think of an FSA as a way to pay for doctor’s visits, deductibles, and monthly prescriptions.  While an FSA is a great way to save on those traditional medical expenses, there is a long and sometimes surprising list of other items and services that are FSA-eligible.

“Medical spending” includes expenses for hearing, vision, and dental health.  Even if you don’t have dental or vision insurance, you can use your FSA dollars to pay for an eye exam or teeth cleaning.  Eyeglasses and contact lenses can typically be purchased with FSA money. Even hearing aids, which are not necessarily covered by insurance, might be FSA-eligible.

Consumer devices meant to diagnose disease are usually approved for FSA reimbursement.  This would include, for example, a blood pressure monitor. If your doctor has recommended monitoring your blood pressure at home, consider using FSA dollars to purchase one.

Even some things you may think of as routine expenses may be FSA-eligible.  Sunscreen and band-aids, for example, can both be purchased with FSA money. Some women’s health items, like pregnancy tests, are on the list as well as a long list of baby necessities like wipes, or even a baby monitor!

To make the most of your dollars, consider visiting a site like https://fsastore.com/, marketed as “Thousands of FSA-eligible products.  Zero guesswork.” FSA Store not only makes it easy to search for and buy items with your FSA dollars; it also offers a wealth of information about making the most of your FSA: an FSA calculator that can help you estimate your health spending for the coming year, step-by-step instructions for using FSA dollars to purchase over-the-counter and prescription drugs, and even a points-based perks program redeemable for coupons to save even more.  You can use fsastore.com to search a product for eligibility, shop by category (such as “personal care” or “baby and mom”) or even shop by “lifestyle,” finding products for everyone from the “workout warrior” to the “tech-savvy healthy guru.”

The IRS maintains a list of approved medical expenses you can consult for more details: https://www.irs.gov/pub/irs-pdf/p502.pdf.  And remember, insurance plans differ from company to company, so always double-check your policy before purchasing an item or service with your FSA dollars.