Spending Out Your Health Reimbursement Account


How to Spend Out Your Health Reimbrsement Account

Whether you are nearing the end of your flexible spending account plan year, or just want to be sure that when that time comes you’ve spent things out, knowing exactly the best strategy for making sure that you get reimbursed for all the money you set aside is vitally important.  There are very strong rules in place that will not allow you to get reimbursed for money already taken out of your paycheck unless the expenses are eligible, so even if the flexible spending account money taken from your paycheck feels like “your” money, you can end up losing some of it.  This section will help you strategize for spending out your flexible spending account.

Of course the best way to ensure you spend out your flexible spending account, and again whether a dependent care or health spending account, is to go into the plan year with a strategy and stick to it.  Know what your bills or expenses are likely to be, save all necessary receipts, and submit for reimbursement on time.  Keep track during the year to see that you are still on track for spending out your flexible spending account money that was put aside, knowing that if you spend it out too fast on necessary expenses that is fine.

But what if you either failed to plan adequately for spending out your flexible spending account, or find that some aspect of the plan you did have changes in a way that means you might have trouble spending  things out.  On the pages in this section we go over those sorts of contingencies related to both health spending and dependent care FSAs.  It may not always be possible to successfully spend your dependent care or health spending accounts out when things change, but we’ll help you try.

First we should go over the kinds of things that can happen that can make it more challenging to spend out your Flexible Spending Account.  These may include:

1. Finding a cheaper option than you expected to pay for an expense.  For example, if the cost of your childcare goes down significantly, this could lower the cost of dependent care significantly, and in this case the amount you put aside for your dependent care account could be too high.  The same goes for a Health spending account – perhaps the procedure or equipment you need drops in price or is more covered by insurance than you expected.

2. The need itself changes, for example if you no longer need a piece of medical equipment or a procedure that you expected.  Suddenly your perfect planning gets thrown off, and you are putting aside more money than you need in your flexible spending account.  This is less likely to happen with a dependent care account, but in some cases care drops in price such as when a relative moves in with you who can take care of the kids.

3. Your medical procedure gets put off, so the costs will not be incurred in the current plan year or will only partially be incurred in the plan year.  There is no carryover with flexible spending accounts so this situation can present a challenge for spending out your health spending account.

4. Finally, the nature of your job can change which can affect traditional dependent care accounts and also travel spending flexible spending accounts.  If your job changes enough you may be able to get your FSA changed in some ways, but if the change is more subtle, such as your job requiring less travel or allowing for more work at home, you may find that you’ve put too much money aside in the flexible spending account for the current plan year.

If any of the above happens, or you merely find that your planning was off by a bit as far as how much money to put aside for dependent care, health spending, or other types of flexible spending account, you may need advice about how to spend out your FSA.  We provide that advice in this section.

Spending out your Health Reimbursement Account:

Prescriptions:

Pay ahead for next year’s prescriptions, such as birth control pills or blood pressure medicine.  Then, in turn, make sure you do not include those expenses in your estimate of next year’s health reimbursement account costs.  And of course make sure that you will continue to need that particular prescription going forward, and that the pills you buy to spend out your flexible spending account do not expire too soon.

Cessation Programs:

If you need to quit smoking, stop drinking, or lose weight look into whether there are ways to do so that will qualify for reimbursement through your health reimbursement account , and if so begin them now and pay up front.  And of course you may save even more money by having to buy fewer smokes or less food!  Some plans will require a note from your doctor that you do in fact need these programs medically

Weight Loss

Not all weight loss programs are reimburseable by flexible spending accounts, but many time if the increase weight is tied directly to a medical problem (e.g. high blood pressure) it may be an eligible expense you can pursue.  And you may be able to pay up front and incur the expenses in time.  Make sure when you visit your doctor you talk to her or him about getting a letter that states you need to lose weight for medical reasons.

Batteries for equipment

If your hearing aid, glucose meter or other equipment uses batteries of any kind, you can stock up and these expenses will be eligible for reimbursement from your flexible spending account.  Stock up as long as you know you’ll need them, and as with prescriptions just make sure the products do not expire before you will use them.

Preventative Tests

Many preventative tests are either free under the new healthcare law or not covered under your health reimbursement account .  However, many are covered and helpful medically, so its worth looking into the possible preventative tests that you could pursue and be reimbursed for from funds you would otherwise lose.

As you can see, with both a Dependent Care FSA and Health Reimbursement Account you are better off spending out your eligible expenses as quickly as possible in the plan year.  There is no reason to spread out expenses you would have anyway because you don’t want to be in a position of having to scramble to spend out the last bit.  But if you are in need of spending out those last eligible expenses, the above any prove to be helpful advice.  Make sure you refer to your own plan’s list of eligible expenses that you might be able to spend out at the last-minute.  While the federal government gives general guidelines, specific flexible spending accounts may interpret these guidelines differently and allow different expenses.