2021 Year-End And Your Flexible Spending Account (FSA) Dollars
Employees Flexible Spending Account is one of a number of tax-advantaged financial accounts providing payroll tax savings. Employees pay no taxes on this money resulting in savings equal to the taxes they would pay on the money set aside.to pay for certain out-of-pocket health care costs. These accounts benefit account holders. Employees can access the entire annual amount on the very first day of the plan year for medical, dental, & vision costs. Lasik procedures, deemed necessary by an ophthalmologist, are capped to a maximum of $2,750 for 2021 and $2,850 for 2022. The FSA account is also known as a flexible spending arrangement.
Year-end 2021 is approaching fast, and there are approximately 2 weeks left. You can take advantage of your FSA dollars. Your FSA dollars pay for eligible items out-of-pocket vision expenses, medical, and dental. A two-and-a-half-month grace period allows employees to spend down remaining FSA funds. However, that is if you are in an FSA with a grace period option. Speak with your benefits administrator and confirm your options.
In 2022 employees can put an additional $100 into health care flexible spending accounts (health FSAs) next year. The IRS is allowing the annual contribution limit to increase from $2,750 to $2,850. Open enrollment for the 2022 benefits year is ongoing at many organizations. The increases may be too late for some employees to take advantage of due to the enrollment date being closed.
The Three Types of FSA accounts:
- Health FSA covers out-of-pocket expenses with pre-tax dollars.
- Dependent Care FSA allows employees to pay for employment-related dependent care services on a pre-tax basis
- Adoption FSA allows employees to set aside pre-tax money for child adopting expenses.
Eligible Items Under Health FSA (Source: FSA Store):
- Covers Eye Exams
- OTC Eye Drops
- Eye Surgery
- Eyeglasses and Frames
- Contact Lenses
Eligible Eyeglass Accessories With FSA Dollars
- Lens cloths and cleaning solutions
- Eyeglass protection solutions
- Repair kits
- Eyeglass Cords
- Screwdriver kits
- Replacement nose pads
- Temple pads
Eye Care Items Ineligible Under FSA
Sunglasses are eligible for reimbursement with an FSA if they contain prescription lenses. Nonprescription sunglasses do not assist with vision correction, and they are not eligible for FSA reimbursement.
- Blue Light Blocking Glasses
Blue light blocking glasses are FSA-ineligible. Your provider can reimburse you for a portion. Or all of the costs if you need them for treatment of a medical condition.
2021 FSA Rules:
The rules regarding an FSA account vary depending on your employer. Contact your benefits administrator to confirm your coverage:
- Per the IRS, some employees can carry over unused health funds from 2021 to 2022
- During the pandemic, employers were allowed to offer more flexibility, and an employer could allow a 2 ½-month grace period to incur health expenses, and usually runs from January 1 to March 15 of the following year
- Pairs of prescription eyeglasses, and sunglasses per year
Contact us to schedule an exam to discuss items that your FSA dollars cover.
Merry Christmas, Happy Holidays, And Happy New Year!