Flexible Spending Accounts (FSA’s) are a good way for consumers to save on taxes but unlike Health Saving Accounts (HSA’s) they cannot be rolled over in the next tax year. The most common type of FSA is used to pay for medical expenses not paid for by insurance; this usually means deductibles, co-payments, and coinsurance for the employee’s health plan, but may also include expenses not covered by the health plan, such as dental and vision expenses and over the counter drugs including a first aid kit. Many people know that prescription eye glasses are covered but few realize that FSA’s also pay for nonprescription reading glasses. Transportation expenses for a medical visit (including and eye exam) can also be covered. That includes parking fees, a bus ticket of miles traveled by car.
FSA users should know their deadline. Many plans give account holders anywhere from 30 to 90 days after the end of the year to submit their receipts from that year. The IRS also allows a separate grace period of up to two and half months to incur expenses tied to the previous year. That means that for some plans, people will have until March 15 to use their 2008 account balances. Another pair of eyeglasses would qualify from a 2008 prescription for example.
Resources: North County Times, IRS