Flexible Spending Account Guidelines

It’s almost the end of year, which means more than 30 million employees enrolled in flexible spending accounts (FSA) will most likely have to use their money by December 31, 2009.

In 2008, the average FSA contribution (or pre-tax money for unreimbursed medical expenses) was $1,385, according to Mercer, a human resources consulting firm.

But keep your eye on the FSA requirements in the future: Although nothing is set in stone, Senate and House health bills are proposing a yearly $2,500 cap in place of the $5,000 cap enforced by most employers today, which could result in higher taxes for companies and employees. If this bill passes, a main change for employers will be that they will become the W2 reporting requirement (reporting the value of benefits provided to employees).

Encourage staff to make it a priority to go to the doctor, pharmacy, and local drugstore before the year is up—the deadline for 2009 is less than three weeks away.

Here are the Flexible Spending Plan Federal Guidelines to give to employees—and always check company policy for accuracy:

• Co-pays and deductibles
• Chiropractor and acupuncture (alternative type treatments)
• Contact lenses, contact lens solution, and prescription glasses
• Over the counter medicine, such as pain relievers and allergy medications
• Smoking cessation programs, drugs, patches and gum
• Medical monitoring and testing devices
• Massage therapy to treat an injury
• Dermatology (not cosmetic)
• Doctor recommended weight loss programs
• Prescription drugs
• Orthodontia
• Flu shots
• Birth control pills and condoms
• Hearing aids and batteries
• Speech therapy
• Psychotherapy, psychiatry, psychology
• Physical therapy
• Fertility treatments
• First Aid Kits
• OTC contraceptives and Rogaine

Products for acne, certain vitamins, sunscreen, and other drugstore purchases may also be eligible expenses.

Currently, FSA plans do not include:

• Employee share of health insurance premiums
• Health club dues
• Electrolysis
• Cosmetic surgery