Using FSA Funds to Purchase Breastfeeding Supplies
A brand-new baby is an exciting time for you and your family! It can also come with some extra costs, but there are ways to save money on expenses like breastfeeding supplies. If your employer offers a Flexible Spending Account (FSA) plan, you can contribute a set amount of pre-tax dollars to a special account, which you can then use to purchase approved medical expenses, including breast pumps and breastfeeding/pumping-related accessories. You’re able to make the purchases with tax-free money, and the amount that you contribute to your FSA helps to lower your annual tax bill. It’s important to save your receipts and track what you contribute, because you’re required to spend FSA funds within a certain time frame. With a little planning, this can be a great option to help reduce costs during this exciting time –here’s what you need to know:
Who is eligible?
If your employer offers you health insurance and also makes an FSA plan available, you’re eligible to participate. You can sign up for the plan when you join the company or opt in during open enrollment.
If you’re self-employed and get health insurance through the federal Health Insurance Marketplace, you aren’t eligible to participate in an FSA plan.
How much can be contributed?
You can decide how much you’d like to contribute to your FSA plan based on your needs. For up-to-date limits, read this article. Some employers contribute funds to their employees’ FSAs, but it isn’t required of them.
You can use FSA funds to purchase breastfeeding supplies and many other medical expenses, including doctor or dental appointments, visits to a psychologist or psychiatrist, prescription medication, laboratory fees, eyeglasses, contact lenses, and more.
It’s important to calculate how much you expect to spend on medical expenses for a given year before choosing how much to contribute, because FSA funds have an expiration date; they don’t roll over from year to year.
How long will I have access to FSA funds?
The money that you contribute for the year is intended to be used during that 12-month period. If you haven’t used all of your funds by the end of the year, you risk losing them. However, some companies offer one of two options so that employees don’t lose money. Find out if your company offers either possibility: (1) Giving you an extra 2½ months to spend the remainder of your FSA funds. (2) Letting you roll over up to $500 of your FSA funds into the next year.
If you stop working for your employer, you’ll lose access to the funds in your employee-sponsored FSA plan, unless you’re eligible for, and elect COBRA and continue making FSA contributions through your former employer. (In this case, your contributions will no longer be tax-exempt, and you may have to pay administrative fees.) If you realize that you’ll be leaving your company, consider spending the remainder of your FSA funds before your last day of work.
Which expenses are covered?
You can use money from your FSA account for a variety of breastfeeding supplies. The funds can be used for items that are directly related to the storage and collection of your milk, like a breastmilk collector (or silicone breast pump) and breastmilk storage bags, or wearable items, such as a pumping bra and disposable nursing pads.
You should also be able to use FSA funds to purchase a breast pump. Although health insurance companies typically cover this cost, some women prefer to leave a second breast pump at work, if they can afford the convenience. Using pre-tax FSA dollars can help save you some money.
FSA plan rules vary, so find out what purchases your plan allows. Your employer may assess a penalty if you make unapproved purchases with FSA funds.
How do I shop with an FSA?
Once you sign up for an FSA plan, the full amount that you’ve allotted for the year will be deposited in your account. (You’ll have access to the money right away, even though you’ll contribute the funds gradually throughout the year from paychecks.) Many employers provide a debit card that’s linked to your FSA account so that you can make eligible purchases directly. Other companies require you to submit receipts for approval and reimbursement. Either way, it’s wise to save your receipts to prove that you’ve used your FSA funds for breastfeeding supplies and other qualifying expenses.
Some of your favorite retailers make it easy to shop using your FSA dollars. Amazon, Target, and Walmart all have FSA/HSA shops online, and you may even be able to link your HSA account for convenience.
It might seem a little daunting at first, but a little planning can help you save more of your hard-earned money.