Use it or Lose it!

As the end of 2009 approaches, Thanksgiving turkey and holiday spending are probably on your mind. For those of you with Flexible Spending Arrangements (FSA) you should be thinking about health care expenses, as well. Many employers have FSAs available to their employees that they can use for certain medical expenses. One drawback with the FSA, however, is that if you don't use money you've contributed to your account during the year, you lose it. In other words, you can't roll over 2009 contributions to 2010 expenses.

FSAs can reimburse you for "qualified medical expenses," and IRS Publication 502 lists these out for you. As headache sufferers some of the following may be of special interest:

• Acupuncture, Chiropractic care, or Osteopathic Manipulation
• Dental work (including exams and x-rays)
• Eyeglasses
• Laboratory fees
• Prescription medications
• Physical examinations
• Stop smoking programs

Non-prescription medications are not deductible as qualified medical expenses, but an FSA can be used to pay for them.

The IRS reminds us that the following are not "qualified medical expenses":

• Amounts paid for health insurance premiums
• Amounts paid for long-term care coverage or expenses
• Amounts that are covered under another health plan

So, if you have health insurance or other health coverage that pays for something already, you can't use your FSA.

For questions regarding FSAs and other tax-advantaged medical savings programs (like Health Savings Accounts) refer to IRS publication 969, or speak to a qualified tax professional.

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