5 Cool Things You Didn’t Know Your FSA covers

Posted in Health Insurance

November 11th, 2009

Flexible spending accounts (also known as flexible savings accounts, or FSAs) have increased in popularity over the years. Designed to help people cover out-of-pocket medical expenses, such as deductibles and co-pays, they take money out of your paycheck on a pre-tax basis. The result is a lower income tax rate. While many people with high deductibles welcome the help they get from their FSAs, one of their biggest drawbacks has been the “use it or lose it” rule. Since the money in an FSA is untaxed, it must be spent within the year it is accrued. This ticking-clock nature of an FSA has caused many participants to worry because they won’t get their funds back. In response to this problem, the IRS has loosened the rules as to what medical-related purchases an FSA will cover, and the results might surprise you.

What’s Covered by an FSA

1. Babysitting
Flexible spending accounts can be spent on babysitting and childcare services for children under the age of 13. Summer camps and day camps are not considered as babysitting.

2. Elderly Care
People with elderly parents living with them can use their FSAs to pay for elderly care, too. Unfortunately, the money can’t be spent on expenses related to a parent’s nursing home care.

3. Braces
Since dental care very often falls outside of health care plans – but still costs a fortune – FSA participants with teenagers will be glad to know they can put their FSA money towards orthodontics.

4. Seeing Eye Dogs
People who are sight and or hearing-impaired can use money from their FSA to pay for canine help.

5. Vasectomies
Although most cosmetic and elective procedures cannot be paid for with money from an FSA, vasectomies are considered to be a part of family planning. Also covered by an FSA are birth control pills and pregnancy tests.