The end of the year is around the corner. Now is the time to make sure you use your FSA funds or lose them!
A Flexible Spending Account is a fund that your employer sponsors for you and is a great addition to your employer health insurance plan. But FSAs expire at the end of each calendar year, so time is running out if you haven’t used all your funds yet! If you signed up for a Flexible Spending Account, but don't know exactly what it does, here's how it works and what you can buy.
According to a Kaiser Family Foundation survey, seventeen percent of small businesses and 74% of large businesses offer an FSA to their employees. The primary benefit of a Flexible Spending Account is that it allows you to put away pre-tax income to spend on qualifying medical expenses. You can save up to $2,650 a year in your FSA, potentially saving you hundreds of dollars on your taxes.
The Flexible Spending Account doesn’t have a year to year “roll-over” option. You must use all the funds in your account prior to the end of your plan’s year. But recently, the IRS has added a special rule. Although they don’t have to, employers can now offer their FSA eligible employees two options to extend their funds. The first option allows you to carryover your funds, up to $500, over to the next year and the second is a grace-period that extends the FSA deadline 2.5 months. Unfortunately, you can only opt into one, if your employer offers it. For answers on which your employers offers, speak to your Human Resources representative.
The eligible items and expenses you can spend your FSA funds on include many everyday products that you would never think of. If you need to make a doctor’s appointment before the holidays, you can spend those dollars on your co-pay, as well as your out of pocket prescription costs. Everything on FSAmarket.com is eligible to buy with your FSA card so there’s no need guessing what you can buy with your card.
Health Savings Account: What’s the difference?
Differing from an FSA, you may sign up for a health savings account (HSA) if your employer offers it. An HSA is only for individuals who have high-deductible health insurance plans. For 2018 the qualifying minimum deductible amount is $1,350 per individual or $2,700 for family. If you qualify you can set aside up to $3,450 for yourself (add $1,000 if you are 55 years or older) and up to $6,900 per family in tax free money.
Putting some of your pre-tax income into a Health Savings Account is a great way to ease the pain of those high costs. The expenses you can use your HSA vary only slightly to an FSA – check with the IRS for eligible items. The primary difference between a Flexible Spending Account and a Health Savings Account is that your HSA has no expiration. Plus, if you ever leave your employer, you can take those funds with you. You cannot have both options, so you must choose one. Check with your Human Resources representative to see which option your employer offers and which option is best for you.
Search the FSA Market’s Eligibility List and discover what products you can buy with your FSA or HSA card!