When health insurance costs began to rise significantly in the late 1960s, employers started including higher annual deductibles and coinsurance contributions in their employer-sponsored plans. In response to these changes, flexible spending accounts (FSAs) came into being, enabling employees to use pre-tax money for health care costs that are not covered by their employer-sponsored health plan.

Jeremy Miller Discusses Four Creative Ways to Spend Your FSA

Today FSAs are quite popular. In 2019, there were about 15 million FSAs covering 35 million Americans, according to Jeremy Miller, Founder and Chairman of Health-E Commerce, a consumer health and wellness online retailer comprised of five brands, including FSAstore.com. The challenge is that many employees simply don’t spend the funds in their FSAs before the plan year expires, and they end up forfeiting the money.

How FSAs Work

An FSA is owned and provided by the employer, with both employee and employer able to make contributions to the account. The money is taken directly from an employee’s paycheck and is tax-free. Each year, the Internal Revenue Service (IRS) sets a limit on the maximum amount that can go into the FSA. For 2022, the limit is $2,850.00, up from $100.00 in the prior year.

The key, says Jeremy Miller, is for employees to understand that FSAs are generally structured as “use it or lose it” accounts. If an employee hasn’t used all or any of the funds in his or her FSA by year-end (typically December), the employer can retain the unused portion.

Note: Some FSAs may allow an amount up to a certain limit to carry over to the next year ($570 for 2022). Additionally, Jeremy Miller notes that because the pandemic saw many individuals deferring non-elective medical procedures, Congress passed temporary legislation in 2021, giving employers the option to allow employees to roll over unused 2021 funds into 2022 for use. Employees need to check and see if their employer adopted this temporary legislation. The law does not apply beyond 2022.

Spend the Funds in Your FSA

The bottom line is that more than $500 million in FSA funds gets forfeited each year by employees. Clearly, employees are either confused about how an FSA works or don’t realize which expenses qualify for reimbursement by the FSA.

For example, you may have used part of the money toward medical expenses like dental care or vision care but still, have funds remaining in your account. Jeremy Miller shares four creative ways to use your FSA spend, so you don’t forfeit your money:

Stock Up on Cold & Allergy Medicines & Products: Go through the medicine cabinet and see what basics you need. You can purchase products such as Tylenol, Advil, Theraflu, Allegra, Zyrtec, and dozens of other name brands, so you are well prepared when you or a family member are feeling under the weather and when allergy season hits.

· Don’t Forget About Acne & Skincare: Spend your FSA dollars on over-the-counter acne creams, serums, and cleansers. Name brands like Neutrogena, Aveeno, Caring Mill, Oxy, Clearasil, and other acne and skin care products are available. Replenish your sunscreen supply before the summer or when hitting the beach during winter or spring break with the kids.

· Be Ready with Menstrual Care/Feminine Hygiene Products: FSA funds can now be used to purchase pads, tampons, liners, menstrual cups, and period panties, thanks to the Coronavirus Aid, Relief and Economic Security Act.

· Get On Board with Baby & New Mom: The cost of baby products can add up very quickly. Use FSA dollars to purchase baby monitors, baby sunscreen, baby wipes, diaper rash products, potty-training undies, children’s pain relief products, and thermometers. As a new mother, you can also buy post-delivery wraps, breast pumps, and nursing supplies.

There are many other categories of products you can purchase with your FSA dollars. It’s important not to let these valuable dollars go to waste.

Jeremy Miller, FSA expert, and entrepreneur launched FSAstore.com in the spring of 2010 after he won Columbia Business School’s Odyssey Global MBA Award for a best entrepreneurial business idea. He has been named 2018 EY Entrepreneur of the Year. In addition, under Jeremy Miller’s leadership, Health-E Commerce has been honored for three consecutive years as a Crain’s Best Places to Work NYC in 2016, 2017, and 2018, and received a Deloitte Technology Fast 500 Award for being one of the fastest-growing companies in North America in 2016, 2017, 2018, 2019, and 2020.