Have an FSA? Here's Why Now's a Good Time to Check Your Balance

Healthcare is an expense that's pretty much unavoidable. And while you could always add money to your savings account to help ensure you're able to pay for it, for many people, an FSA makes just as much sense, if not more.

An FSA, or flexible spending account, is a tax-advantaged account that can be used for healthcare spending. The money you contribute to an FSA goes in on a pre-tax basis, thereby exempting some of your income from taxes. You can then take FSA withdrawals to pay for expenses like medications, doctor visits, dental care, and eyeglasses as long as they're prescription. 

But there's a downside to funding an FSA. These accounts typically require you to spend down your plan balance by the end of the year or risk forfeiting some of your money. And while some FSA do come with a grace period that allows you to carry money into the following year until mid-March, if your plan doesn't allow for that, then it means you only have about two and a half months to spend down your balance. 

That's why now's a good time to see how much money is left in your FSA. Once you get that number, you can make plans to spend it so it doesn't go to waste.

When you're able to use up your balance calmly and efficiently

Some people wait until December to see how much money is left in their FSAs. If you go that route, you might end up having to scramble to spend down your balance. So a better bet is to check up on it now. 

But also, see what provisions your plan comes with. It may be that you get a modest grace period that gives you a little extra time to use up your funds in 2024. Or, you may be able to roll a limited portion of your FSA from 2023 into 2024. Figure those things out now so you can make a solid plan for your balance.

How to spend down an FSA balance

Let's say you check your FSA balance and find that you have quite a bit of money left. Let's also assume that your plan doesn't offer a grace period or carryover. In that case, don't panic. There may be plenty of ways you can put your remaining funds to good use.

First, think about medical appointments you commonly schedule every year. If you generally see the dermatologist in January, moving your appointment up to December allows you to pay your copay this year. That's an FSA-eligible expense you won't have to tap your bank account to cover.

Next, think about your medications. If there's a prescription you take regularly, you may want to try to renew your bulk supply before the end of the year. (If your prescription is filled monthly, you might have less leeway for filling it ahead of schedule, though it's always worth checking with your health insurance company.)

From there, think about your dental and medical needs -- and those of your family members. If you've been putting off that orthodontic consultation for your child, you may want to schedule it for the latter part of 2023 so that if you owe money, you can tap your FSA for it. 

If your eyeglasses have seen better days, you may want to use your FSA to cover the cost of a new pair. And if you have a young child who wears glasses, it's always a good idea to have a back-up pair on hand -- just in case.

There are also numerous over-the-counter products you can use your FSA balance for. FSAstore is a good resource for FSA-eligible purchases.

You should do your best to avoid having any portion of your FSA balance go to waste. So take the time this month to see what yours looks like -- and make a plan for spending it in time.