One in three workers will lose their flexible spending account (FSA) money.  That is because some 33 percent of employees are holding balances in “use-it-or-lose-it” FSA’s intended for out-of-pocket medical expenses.

An FSA allows employees to set aside pretax dollars to pay for out-of-pocket medical expenses.  But, if you do not incur enough expenses by the end of the year, the leftover balance is forfeited to your employer.  Some employers extend that date to March 15 of the following year. In 2013, FSAs under U.S. health reform will for the first time be capped at $2,500; previously, employers set their own limits.

The U.S. Treasury Department last summer also asked for comment on allowing FSAs to carry over from one year to the next. “We’re very hopeful that the use-it-or-lose-it requirement will go away,” said Natasha Rankin, executive director of the industry group Employers Council on Flexible Compensation (ECFC). Only about 28 percent of employees use FSAs, and Rankin believes they would be more popular if workers could carry them over.

For workers with traditional FSAs, December is usually the time to drain the account. Here are ten suggestions of qualifying expenses you may not have considered:

— Review what you have spent. Sometimes, a look at your records will reveal medical expenses you have incurred over the year but have not yet withdrawn from your FSA. Check with your insurer for a list of office visits that may reveal unreimbursed co-pays and deductible expenses.  Also, your local pharmacy can give you a complete list of prescriptions filled throughout the year.

— Head to the drugstore. Although over-the-counter medications are only eligible with a prescription, ECFC counts more than 32,000 over-the-counter items that do not require prescriptions and can be paid for with FSA money, including first-aid basics such as Band-Aids. A complete list is regularly updated by the information clearinghouse Special Interest Group for IIAS Standards and can be found on its website.

— Pay for parking. If you drive to medical appointments, out-of-pocket expenses, such as parking or tolls are eligible. You can also claim 19 cents per mile driven as well as costs for meals or lodging during a hospital stay. Also, don’t forget receipts for ambulance service, bus, taxi and airline fares related to medical visits as well.

— Kick a bad habit. Smoking cessation, alcohol or drug treatment, or medically needed weight loss programs are eligible expenses.

— Make appointments. Have you been putting off a dental cleaning? An eye exam?  Even if your insurance covers preventive care, your FSA can pay for necessary follow-up. Plus, stock up on glasses, contact lenses, even contact solution – all qualifying expenses.

— Schedule and pay for “discretionary” surgeries. If you have a large balance, arrange to have any surgeries done that you have been putting off.

— Get adjusted. Although rarely covered by insurance, trips to the chiropractor, acupuncturist, even osteopath can be paid for with FSA money.

— Get pregnant, or not. For parents-to-be, FSA funds will pay for fertility treatments, pregnancy test kits, even Viagra. Prep for baby by using your FSA to buy a breast pump. Adoptive parents can also have any medical expenses associated with the adoption reimbursed. On the other hand, sterilization treatments such as a vasectomy as well as birth control also qualify.

— Think ahead. Considering LASIK surgery next year? Kids need braces?  See if you can incur the expense in the last weeks of December instead and use your unspent funds.

— Don’t stress. An average of $120 is left in FSAs with most people forfeiting less than $100. So, even with a small balance, you’re probably still ahead tax-wise.

If you are still feeling anxious about that, ask your doctor to prescribe a massage. Then you can use the rest of your FSA to pay for it.

Information provided courtesy of the Employers Council on Flexible Compensation (ECFC), of which Glynn Griffing & Associates, Administrators is a proud member.

Working together.