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Flexible Spending Account Changes

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The health care reform law has some new rules that affect how much you can contribute to your flexible spending account.  That's the use-it-or-lose-it tax-deferred health care account to pay for qualified medical expenses.

In most cases, you have until next March to use your 2010 flexible spending account money.  Kiplinger.com says there are three new rules that may affect the amount of money you decide to set aside in your account for next year, and how you use your money left over in the last few months of this year.  

  • Starting in 2011, you'll no longer be able to use FSA money for non-prescription drugs.  So ask your doctor if you can get a prescription for an over-the-counter medications you use on a regular basis.
  • Also, the law will let many parents use their accounts to pay for medical expenses incurred on behalf of a child through the end of the year in which the child turns 26.
  • And while FSA limits aren't changing next year... they're still federally capped at $5000 a year... that's going to shrink to $2500 in 2013.  So you might want to get in that costly elective medical procedure that's not covered by insurance, such as laser eye surgery, during the next couple of years.

Click here for Kiplinger's "new Rules for Flexible Spending Accounts"