Personal Finance

Why sunscreen is a smart year-end purchase

Tricks to avoid losing healthcare cash

Use it or lose it? Hardly. This year, it's easier to make sure those pretax contributions to health care flexible spending accounts aren't lost.

It used to be that any FSA funds left at the end of a plan year were forfeited, but last fall, the Internal Revenue Service modified the rules. Now, employers can offer workers a carryover of up to $500 of unused balances at the end of the plan year, or give them a 2½-month grace period in the next year to spend that money. Check to see if your plan is among those offering a reprieve.

Benefits administrator WageWorks, which works with 45,000 companies covering 3.8 million employees, reports 1,200 of its employers had a carry-over provision in place for 2014. Tallies haven't been finalized yet this year, but they expect a percentage increase in the "mid to high teens." "The $500 carryover virtually eliminates the risk of losing any leftover balance, while helping people save money on their health-care expenses from day one," said chief executive Joe Jackson.

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Even if the clock is running out on Dec. 31 for your plan, experts say it's rare to have substantial losses from FSAs. Most forfeits are less than $500, according to the Treasury Department, and WageWorks puts the average at a much lower $75. That's not much, considering that contributing the maximum $2,500 into one of the pretax accounts results is a tax break of $625 for someone in the 25 percent federal tax bracket, and up to $990 for top earners.

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Carryover or not, there's often a scramble at the end of the year as consumers try to spend down their accounts, said Jeremy Miller, founder and chief executive of, which true to its name sells only FSA-eligible goods. "Inevitably there are people who wait until the last moment to spend those funds," he said. (For some creative tactics, check out the above video.)

One shopping trip might be enough to clear out your remaining balance. While medications require a prescription to be eligible, there are more than 6,000 products that don't need that extra paperwork, Miller said. "People jump to the conclusion that everything over the counter isn't eligible," he said. Think first-aid kits, hot and cold packs, diabetic testing kits, prenatal vitamins and contraceptives, among other items. Even sunscreen fits, provided it has an SPF of 30 or higher.