Now is the perfect season to make the most of your remaining FSA dollars

Healthcare costs aren’t nearly as fun to save for as a vacation or a flat-screen TV. But with a flexible savings account (FSA) or health savings account (HSA), you can save money- tax-free-from each paycheck and apply the money toward your therapeutic massages. It’s important to make the most of the funds you have already allocated-especially in the case of FSA’s, which give the funds back to your employer if the dollars aren’t spent by the end of the calendar year.

FSA’s and HSA’s are a key part of a system of consumer- driven healthcare.

If you have an FSA, here’s how it works: Usually during the fourth quarter of the year your employer conducts open enrollment, during which you decide how much money you will need to deposit for the following year’s medical expenses. When the new year starts, your designated funds are withdrawn from each paycheck in small increments and placed into a special account. An HSA works much in the same manner but is tied to a High Deductible Healthcare Plan (HDHP). With an HSA, unused funds roll over to the next year and accumulate. Because these plans are funded with pretax dollars, you and your employer can save hundreds of dollars in federal, FICA and state taxes.

Both employers and individuals are embracing consumer-directed plans not only for the tax-savings benefits but for the reduction of monthly medical premiums. You’re taking control of what qualified medical expenses you want to pay for. If the money comes out of your personal account, you’ll think much differently about how to spend it.

Is My Massage Eligible?

Massage can be a qualified medical expense, as long as a physician recommends it with a written prescription. The IRS ruling states that medical care expenses must be primarily to alleviate or prevent a physical or mental ailment. Examples of illnesses that qualify include carpal tunnel syndrome, stress, back pain, arthritis, diabetes, hypertension, fibromyalgia, chronic fatigue, anxiety, depression and pain management.

First Steps

If you suffer from one of the above conditions (and who isn’t stressed?), all you need to do to set up massage as a qualifying expense is pay a visit to your medical practitioner. Let him or her know that you have an FSA or HSA and you’d like to use some of your funds toward massage for treatment or prevention of your condition.

Your physician will need to provide three pieces of information on the prescription to help you qualify:

1. Medical necessity: why do you need massage therapy (example: to relieve back pain)
2. Frequency: number of sessions per month (example: minimum of two sessions per month)
3. Duration: length of treatment (example: 12 months/1 hour each)

Once you’ve obtained the prescription, file it away in case you are ever asked to substantiate the expense. It’s not necessary to bring the prescription to me, but you should bring your FlexCard (if you have one) to pay for your next visit. If you don’t have a FlexCard, simply pay for your massages yourself and turn in your receipts for reimbursement. Note that you can’t include tips or pay for your entire costs upfront.

Planning for Next Year

During the fourth quarter is when many people designate how much money to set aside in their FSA for the next year. In your financial planning, don’t forget to include the cost of your massage therapy visits in the total amount. You also can set aside money for massage therapy for a spouse, if he or she has a qualifying medical condition. For each person, you could save $20-$30 a month in taxes, and that’s enough to relax anyone.