News & tips on health, fitness and nutrition

Wednesday, December 10, 2008

Flexible Spending Account (FSA) and Health Savings Account (HSA)

If you have a Flexible Spending Account (FSA) or Health Savings Account (HSA), there are all sorts of health and medical expenses you can purchase, which will essentially lower your taxes! If you aren’t familiar with an FSA, it’s a plan you can set up through your employer (if they offer this), and you put in money from your paycheck to the plan, and that money is not taxed! You can then use that money to pay for qualified medical and health expenses. You must use the money you put in within the coverage period, which many times ends at the end of the calendar year. If you still have money left in your plan for this year, don’t let it go to waste!
Medical expenses, dental and eye care are eligible for use with your FSA, but check with your provider to see specifically what they cover. Many over-the-counter products such as cold medicine, bandaids, allergy medication, and pregnancy tests are also covered. See a list of eligible FSA expenses here.
Here are some health and skin care-related examples of what you can usually purchase with your FSA money:-Birth control pills
-Stop smoking programs
-Wig to replace hair lost to disease
-Acne treatments (medically necessary)
-Medicated shampoos and soaps (medically necessary)
-Wart removal
-Weight loss products (medically necessary)
-Over-the-counter hormone therapy
What’s not covered by your FSA:-Sun tanning products
-Unnecessary cosmetic surgery
-Hair removal
-Teeth whitening
If you shop at Target (and I’m sure other stores do this too), they actually tally up products on your receipt that can be eligible for your FSA. I noticed this recently and thought it was pretty nifty. Now I just need to get my own FSA!
Again, make sure to check with your plan to see exactly what they cover, since all plans are different. If you itemize your taxes and have medical expenses that exceed 7.5% of your adjusted gross income, you can deduct the expenses that exceed the 7.5%. After looking at the IRS website, I was not clear if the same eligibility rules apply as they do for your FSA - like if you can deduct sunscreen, for example. Make sure to ask your tax advisor about this, because you may have some extra savings coming your way!

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