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What to know about your FSA
- Check your employer's policy: The first thing to do is remind yourself what your employer's policy states regarding the FSA they offer. Some employers allow you to carry up to $500 into the next year or offer a grace period of up to 2½ months after the end of the plan year. They can either offer a carryover or a grace period, but not both. So check the policy to see what you have to work with and go from there. (A grace period of 2½ months, for example, would mean you have until March 15, 2018, to finish spending your 2017 FSA contribution.)
- Understand what can be purchased using FSA dollars: The next step to spending FSA dollars wisely is to check the IRS rules on what is or isn't a qualified medical expense under the FSA guidelines. As a general rule of thumb, every expense should have a medical need and every medicine should have a prescription. (It cannot be for cosmetic purposes unless it's needed to treat a disease, for example.)
How to spend your FSA dollars
- Some OTC medications, even with a prescription, have to be paid out of pocket and then reimbursed from the plan by submitting a claim