Eden Prairie, MN., Tuesday, 3/15/2005. Filled prescriptions zipped down the automated conveyor belt at the Health Partners prescription-filling facility in Eden Prairie. Story is about the rising price of prescription drugs and what companies are doing to reduce costs. HealthPartners operates an automated prescription-filling facility for mail order prescriptions, which are a lot cheaper than prescriptions filled at retail pharmacies.

Bruce Bisping, Star Tribune

Some flexible spending accounts now allow rollovers

  • Article by: ann carrns
  • New York Times
  • November 9, 2013 - 4:52 PM

As the end of the year approaches, it’s a good time to check whether you have a balance remaining in your health care flexible spending account. And a recent Treasury Department decision could work in your favor.

The accounts, formally known as flexible spending arrangements, or FSAs, help you save money by letting you defer money pretax to pay for expenses that aren’t covered by your health insurance plan, such as co-payments and coinsurance, as well as dental and vision costs.

As of early this year, about 23 percent of people with private health insurance were in a family that had an FSA for medical expenses, according to the Centers for Disease Control and Prevention. That’s up from about 19 percent in 2008.

If you have a medical expense, the funds in a flex account are available to you once the plan year starts — you don’t have to wait until you have accumulated enough to cover a bill.

The catch has been that if you don’t use all the money by the plan’s annual deadline, you forfeit it. The Treasury Department said in October, however, that employers could now allow plan participants to carry over as much as $500 of FSA balances remaining at the end of a plan year. The rollover could begin as early as this year, although employers are not required to do so.

Flex accounts differ in that way — and in others — from health savings accounts, or HSAs, which let you keep all the money you contribute. HSAs can be used only with a high-deductible health plan and can be spent only as you accumulate the funds, not in advance.

Many flex accounts have traditionally had calendar-year deadlines, requiring that the money be spent by Dec. 31. Tax rules have let companies offer a 2½-month grace period after Jan. 1, if they choose, giving employees until March 15 to spend the money.

But given the new guidelines, you should check with your human resources office to see whether your company will allow a rollover or will continue to require you to spend the money but with a grace period.

The new rules permit either a rollover or a grace period, but not both.

Jody Dietel, compliance officer with the benefits manager WageWorks, suggests going online to your health benefits site to check your claims history and whether there are any eligible costs that you haven’t yet submitted for reimbursement.

If you do have a significant amount of money left and need to spend it, consider needs that might be eligible. Vision examinations, contact lenses, maintenance medications, blood pressure monitors and even a good first aid kit can usually qualify.

Keep in mind, however, that FSAs cannot be used for over-the-counter drugs unless you have a prescription. It may seem odd to ask your doctor for one, but it’s worth it for a product you expect to take routinely — say, cough medicine for colds, or glucosamine for joint health.

Many over-the-counter items, however, don’t require a prescription for reimbursement, she said, including products like sun block and contact lens cleaning solution.

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