Spending Down a Flexible Spending Account

Did the law change so I don’t need to worry about spending down my flexible spending account by the end of the year?

Last year, the Treasury Department changed the rules so companies could allow employees to carry over $500 in their medical FSAs from one year to the next. But employers weren’t required to make the change. Some offer the $500 carryover, but some still offer a grace period until March 15 to use the money instead (they can’t offer both the carryover and the grace period). And some employers offer neither option, requiring you to use the money by year-end. A survey by Visa and WageWorks, which administers FSAs for employers, found that 53% of employers planned to offer the carryover in 2014. Ask your employer about its rules.

50 Ways to Save on Health Care

Even if your employer offers the $500 carryover, you may need to do some last-minute spending if your account balance is above that level. Now is the perfect time to schedule some year-end appointments to use up more of the money, such as for dental and vision care that isn’t covered by your health insurance.

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You can use the health-care FSA money for your deductible, co-payments and medical and prescription-drug expenses that weren’t covered by insurance, as well as for eyeglasses, prescription sunglasses, contact lenses and lens solution, prenatal vitamins, breast pumps, hot and cold packs, knee and ankle braces, thermometers, blood-pressure monitors, vaporizers, heating pads, pregnancy test kits, bandages, first-aid kits and even some sunscreens, says Jeremy Miller, president of FSAStore.com, which sells FSA-eligible items. See 7 Smart Uses For Your Flex-Account Money for more FSA spending ideas.

If you have a dependent-care FSA, you still have to use all the money in that account by December 31. You can use it for the cost of day care, a nanny or a babysitter while you work, before-school or after-school care, and even day camp for the summer or school breaks-- as long as your child is under 13. For more information about those rules, see Reimbursing Yourself from a Flexible Spending Account.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.