The 4 Best Ways to Spend Your Extra FSA Dollars Before the End of the Year

If you work for a company or employer that offers an FSA plan, you're probably encouraged to take advantage of it — and for good reason.

FSA dollars, or Flexible Spending Account dollars, are certain funds set aside by an employee or employer as part of an employee benefits package to cover eligible out-of-pocket, health care-related expenses, per Healthcare.gov.

The funds in an FSA are tax-free, meaning you can avoid paying taxes on certain health care purchases.

"Without an FSA, the money that goes toward health care costs is after-tax dollars, which can equate to a savings of up to 40 percent on each dollar you put into your FSA," says Ann Kaplan, PhD, a doctor of business administration in Toronto.

You may also be offered a Health Savings Account (HSA), which is a bit different from an FSA. With an HSA, you can carry over any unused funds in your account from the previous year to the next year without the risk of losing money, says Fred Winchar, co-founder, president and CEO of MaxCash, a leading financial broker in the U.S.

"With FSAs, on the other hand, if you have unused funds from the year, you cannot carry them over to the next year," he adds. Therefore, you risk losing money you did not spend.

Because you can "lose" the money you have in your FSA if you don't use it by a certain time, it's a smart idea to have a plan in place and strategy for how you're going to spend your dollars.

An FSA can be used to cover the cost of insurance deductibles and co-payments, prescription medications and medical equipment like crutches, according to Healthcare.gov.

But many over-the-counter products are also FSA-eligible, including the following categories:

• Over-the-counter medications
• Some dental care and eye care products
• First aid supplies
• Menstrual products
• Certain skin care products (for conditions like acne or psoriasis, for example)
• Select baby care and parenting essentials
• Pregnancy and fertility tests
• Pain-relieving products and devices
• Personal protective equipment
• Medical alert devices

Below, experts share some of the more surprising ways you can spend your FSA dollars:

Sunscreen helps protect your skin from the sun's harmful UV rays and reduces your risk of getting skin cancer. So it's considered a health purchase, and therefore, a qualified medical expense. (This includes many lip balms with SPF, for the record.)

You can certainly stock up for your next beach vacation, but you should also be using sunscreen year-round any day you head outside, per the American Academy of Dermatology (yes, even when it's cloudy!).

The best sunscreens have the following, per the AAD:

• SPF 30 or higher
• Broad-spectrum protection (against both UVA and UVB rays)
• Water-resistance

Any supplies used for breastfeeding or chestfeeding are eligible for reimbursement with a flexible spending account (FSA), health savings account (HSA) or a health reimbursement arrangement (HRA).

This can include things like breast pumps, nursing pads, milk storage bags, nipple creams and more (although bottle supplies are not eligible, per the FSA store).

Whether you're planning to breastfeed or are currently breastfeeding and want to upgrade your pumping equipment, these supplies are a great way to put your FSA dollars to good use.

As of January 1, 2020, menstrual products for monthly periods, including pads, tampons, medicines, reusable underwear and even heating pads, are recognized as health care needs — in an attempt to address gender equality.

"Therefore, you can use your FSA dollars to buy monthly period supplies like underwear for your periods, menstrual cups, tampons, panty liners and pads," Winchar says.

You may know that many over-the-counter medications, including pain relievers like ibuprofen and Tylenol, are FSA-eligible.

But if you're someone who deals with chronic pain or soreness — whether from conditions like arthritis, menstrual pain or even from athletic training — you might be interested to know there are many other pain-relief products eligible for FSA spending, including:

• Heating pads
• Pain-relief creams
• Massage guns
• Orthotics
• Acupressure devices
• Pain-relief pillows

If you're unsure if a product is FSA-eligible, you can go to the online FSA store, which shows a detailed list of eligible items and expenses.

"In order for something to be eligible, it must be for the primary purpose of diagnosing, treating, curing, mitigating or preventing a medical condition," Dr. Kaplan says.

And if you don't fully trust the online eligibility lists, "you can always check with your plan coverage and look for any fine print, like needing a doctor's note," she adds.