This past New Year’s Eve was really laid back for me. We didn’t venture out, after being out of town until that evening. Had a good mini-trip, but the real fun occurred upon getting back in town.
You see, I did not use up my entire FSA allocation. Because of time constraints and really some procrastination as well, I did not make a few appointments I needed to make. The money allocation was only slightly excessive, but it just didn’t get used. The good news is that I didn’t desperately need medical care for anything, which is nice. The flip side is that it left me with about $300 to spend on health care items – or else I would lose the money.
Lesson to Everyone: Make and follow a plan to use up all of your flexible health pre-tax dollars, and get the process started early in the year.
To use up the money at the 11th hour, I went to a local Walgreens drugstore and bought as many relevant OTC items I could purchase. Here’s a sampling of my last minute finds:
- Contact lens solution – 5 bottles
- Contact lens cleaner
- Ibuprofen bottle
- First aid kit
- Bandages
- Burn gel
- Antiseptic cleaner
- Gel foot soles
- Cough drops
- Children’s cough medicine
- Tooth pain gel
- Antibiotic ointment
You name it, I was buying it! It was sort of like a shopping spree, where you have a matter of 3 hours to buy things or the money’s gone. The difference is that money was already mine:)
As odd as it may seem, the reality is that most of the things there were things I needed. Well, maybe not the gel soles, and not the tooth pain gel. But they couldn’t hurt to have:) Otherwise, the other things are items that I could probably use anyway. Besides, I thought it made sense to stock up since many OTC products may not be eligible for pre-tax savings in 2011 (but hey, at least we have the 2011 payroll tax holiday to even it out!). That’s right – FSA eligible expenses are different in 2011. In the end, all was not lost, and it ended up being kind of fun.
A funny moment was when my daughter, getting caught up in the buying frenzy, asked if a singing stuffed animal counted as a medical purchase because laughter is good for the heart. I LOVED THAT! I have to say, since it was on sale for like $8 I bought it for her.
Interestingly, there were many others there who were in the same boat when it came to using up their funds. I had two people approach me asking if I was doing the same thing they were and trying to use up funds. It was like a bonding experience, as we ran into each other in the various aisles, trash talking with each other about how many more band-aids each other would purchase. One guy said that he and his wife had over $1,000 to spend! He was apparently calling family and friends asking if they needed anything at all. Anything.
I guess this is New Year’s excitement as you get older, eh?
We’ll have things planned out better this year, though I have to say, it all worked out pretty well in the end.
What about you?
Do you successfully plan out your pre-tax health care expenses (as best as possible, of course), or do you find yourself catching up at year end?
This does sound like a fun activity! I looked over the paperwork to sign up for 2011, and ended up tossing it out. I am not a planner, and it sounded like too much to keep track of, though I do see the benefits for those who are willing to take on the extra planning – especially the wild end-of-year shopping trips.
Lindy – next time, give it a shot. It can be very easy to manage. Some people I know (including me) use an FSA debit card, where you can just use it without hassles. Just fill out the annual election forms each year, set aside a conservative amount (based on your estimates), and start saving.
I was doing the same thing. The last week of the year, I decided to pay my dentist for an overdue bill that my insurance company was still screwing up and not paying. I figure I could still claim it back someday if it ever gets resolved.
Interestingly enough, I got a letter from my flexible spending people saying something like due to 2011 obamacare changes in health care policy, certain over the counter medications will no longer be covered unless accompanied by a doctor’s note. Here I just looked it up, the exact language from Ceridian was
“Effective Jan 1, 2011, in order to be reimbursed for OTC drugs and medicines from your HFSA, you must provide supporting documentation such as a doctor’s prescription”
First Gen – yep, that’s what I have been reading as well. OTC products won’t be handled the same this year as they were in years past. All the contact lens solution I purchased ended up being a worthwhile purchase, as I’m saving 30%-ish on each one – compared to what I would be paying in 2011.
This is embarrassing but we don’t use our health FSA at all. I totally max out the daycare FSA but just can’t predict what we need in terms of health and our regular expenses for OTC stuff are generally like $20 per year and not worth filling out the paperwork to get the tax credit for. Now that OTC stuff is no longer allowed, it’s even less likely…
Nicole – good that you max out the daycare FSA as much as you can. As for health FSA expenses are concerned, just estimate conservatively and you still could come out ahead. For example, even if you’re going to have a standard Dentist and Optometrist appointment, that’s a good start in terms of planning.
We had about $100 left in December and used it all on cold medicine, ibuprofen, allergy pills, band aids, tum, and more. Wow, 3 hours left? That’s cutting it close.
This year we drastically cut FSA because of the no OTC change.
Retirebyforty – your $100 spending spree sounds a lot like mine! Though I take it you had a few more than a few hours left. Good point on cutting pre-tax allocations for 2011, as OTC medicines/products can add up quickly.
Orthodontia, contact lenses, eyeglasses, and dentist’s visits easily covered ours :-[
Holly – I know that contacts, glasses, and dentists can create some decent expenses. Othodontists can be in a different stratosphere.
I have participated in my FSA for years, I have all the funds spent by Fall. Perhaps I should increase the deduction, but I try to be conservative.
kratncents – I think it’s wise to be conservative. If you overestimate, you’ll end up wasting money or using it on medical care that isn’t critical.
I always have my FSA spent by Fall too. I’m always so worried I’ll have some cash left!
Our plan is from July 1 to June 30. But we always have some balance left and we always get new glasses and/or contacts. We try to budget so that we have something left at least for my contacts. But it is difficult because you never know what medical expenses will hit you as a year goes by…