Many people take advantage of employer’s flexible spending accounts. These accounts allow you to defer income which can be drawn upon to reimburse you for medical expenses. The benefit is the funds in these accounts are not considered income for tax purposes.
In order to make the best use of these accounts, you have to decide at the beginning of the year how much you will spend for medical expenses even though it’s difficult to predict unexpected problems. You don’t want to overestimate, because any funds not used at the end of the year disappear. It’s similar to throwing money away or burning hundred dollar bills without the expenditure of a match or oxygen.
The good news this year is the government is giving you extra time to apply for medical reimbursement from a flexible spending account. In most cases, your employer will also offer the extended deadline, but you may have to check with your company.
If you have money left over, there are some things you can do to spend the remainder quickly but not thoughtlessly:
* Stock up on certain non-prescription drugs (not vitamins).
* Get a new pair of eyeglasses, contact lenses, or prescription sunglasses.
* Browse a list of all covered expenses to see if anything you missed this year is eligible.
Updated June 17, 2014 and originally published December 15, 2005. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.