Spending Qualified Health Dollars Smartly

by Prof. Robert Bloink and Prof. William H. Byrnes

As we move deeper into the fourth quarter, many individuals may be starting to focus on spending down dollars in their tax-preferred health savings accounts (HSAs), health flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs). Some of these valuable accounts are subject to a “use-it-or-lose-it” rule where funds not spent before the end of the year (and any applicable grace period) are simply forfeited. Individuals who have funded these types of accounts should be reminded about the changed rules governing the purchase of over-the-counter items with these accounts. Clients should ensure their purchases satisfy IRS requirements before making purchases such as personal care items and items other than actual medicines.

Reimbursing Over-the-Counter Medical Costs: The Basics