Listen to Your Heart...Maybe You'll Use an FSA
A little record keeping can mean substantial savings
Cosmetics and toiletries such as shaving cream and shampoo are not eligible. Neither is that bogus Botox-in-a-bottle (or the real Botox, for that matter). Also out: vitamins, minerals, and other supplements that are used mainly to promote general health rather than to treat a specific condition.
Keep on filing. It's easy to lose track of OTC purchases because they can be small and mixed in with other items, such as groceries or gasoline (Advil for that road-trip headache). "People with FSAs need to keep track of all their receipts and also file them frequently," says Kraushaar, noting that lost opportunities for OTC reimbursements are the biggest cause of forfeited FSA funds at the end of the year. Timely filing also will help you keep track of how much money you have left in your account as the year winds down.
Some pharmacies, such as CVS and Safeway, make the record keeping easier by reminding customers at the register and on receipts that certain OTC purchases are reimbursable through an FSA. Although most plans still require that the user submit receipts to be reimbursed, some have begun offering debit cards that can be used at the time of purchase (and also for copays), thereby eliminating the paperwork.
If you still find yourself scrambling to empty out your FSA as December comes to a close, check with your employer, as your plan may be one that allows expenses incurred in the first 2½ months of the new year to be charged against the previous year's FSA. Since the IRS relaxed the filing rules last year, most employers have adopted them, according to Mercer's Bos. If your plan doesn't have an extension, well, maybe it's time for a new pair of glasses.