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Use It or Lose It If you've shopped around for alternative healthcare plans, you may have come across the term "use it or lose it." This term is used to distinguish rollover plans from other plans that are out there. But what exactly does "use it or lose it" mean when it comes to your healthcare? How Does "Use It or Lose It" Work? One type of healthcare plan which follows the "use it or lose it" principle is a flexible spending account. Flexible spending accounts from take care allow employees to put pre-tax dollars into a special account that can then be used to pay for qualified medical expenses. The money in this specific type of account must be spent within that fiscal year. In other words, if you don't spend it, you lose the money. At first glance, such plans may leave you with some concerns. No one wants to make unused contributions. Thankfully, you don't have to. Employees have control over the contribution total. You calculate what your average health care expenses are and figure out an appropriate monthly contribution, which is then deducted from your paycheck. With flexible spending accounts, the total of your contributions is available the very first day of your plan, allowing you to cover costs before you've saved the money. Since you decide how much you put in, there is no need to worry about large leftover balances. The important thing to do is know what counts as a qualified expense. This will keep you from over or underestimating how much to contribute. Still, if you do find yourself with money to burn at the end of the year, there are several ways you can use the funds. Most plans cover over-the-counter (OTC) medications. Stocking up on cold and allergy medications may be a good idea. Eye care, such as new contacts or prescription glasses, may also be a good end of the year expense. |
Additional Topics Consumer-Directed Health Plans Consumer-Driven Health Accounts Dependent Care Flexible Spending Accounts Flexible Health Spending Accounts Flexible Medical Expense Accounts Health Care Flexible Spending Accounts Health Reimbursement Arrangements IRS Section 125 Cafeteria Plans Medical Expenses and Income Tax Plan for Medical that Health Insurance Doesn't Cover Save 25% to 40% on Health Expenses Save on Co-Pays and Over-the-Counter Medications Save on LASIK and Orthodontic Costs Section 125 Plan Administration |
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