It is open enrollment time! Does your company offer a Health Savings Account (HSA) plan or a Flexible Spending Account (FSA) plan? It might be in your best interest to enroll in one or both of these tax savings accounts.
A Health Savings Account (HSA) is a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses including deductibles, copayments, coinsurance, and some other expenses including some over-the-counter items, but generally may not be used to pay premiums. The maximum contribution for an HSA in 2022 is $3,650 for an individual ($3,850 for 2023) and $7,300 for a family ($7,750 in 2023).
Please note the following attributes of an HSA:
- You may contribute to an HSA only if you have a qualifying High Deductible Health Plan (HDHP). The HSA contribution limit for 2023 is $3,850 for self-only coverage and $7,750 for family coverage. Those 55 and older can contribute an additional $1,000 as a catch-up contribution to their account.
- HSA funds roll over from year to year if you don’t spend them.
- An HSA may earn interest or other investment earnings, which are not taxable.
- You will receive a debit card which can be used to pay copays, due balance bills, etc.
A Flexible Spending Account (FSA) is an employer-sponsored spending account that allows employees to set aside pre-tax earnings to pay for eligible healthcare or dependent care expenses, including deductibles, copays, medication, and other health-related out-of-pocket costs. Pre-tax funds are deducted from each paycheck and automatically deposited into an FSA account. Employees decide how much to contribute, tax-free, for the year. The Health Care (standard or limited) FSA annual maximum plan contribution limit will increase from $2,850 to $3,050 for plan years beginning on or after January 1, 2023.
Please note the following attributes of an FSA:
- You can’t take the account with you if you leave the company.
- Employees can spend the money in the account before it’s fully funded.
- If you do not use all the money in your account in the given year, you may lose it all. In the New Year, companies may allow a rollover of $610 a year for plan year beginning January 1, 2023 or allow 2 ½ months to use the remaining 2022 funds to pay 2022 expenses.
Think about your out-of-pocket medical expenses and plan ahead by personalizing your FSA or HSA deductions to accommodate your annual medical expenses.
For more information:
- Talk to your employer about HSAs, FSAs, and other types of savings accounts.
- Ask your tax adviser about medical savings accounts and taxes.
- Visit the IRS’s website (irs.gov).
If you are Aware, Prepared, and Proactive you can save yourself money in 2023!
Healthcare Pathfinder can help you review your coverage, explore options and make changes. We are a fee-for-service professional healthcare advice, advocacy, and management firm. We do not sell insurance or share commissions.
Contact Healthcare Pathfinder at 888-511-0128, ext. 104, or view our website for more information: www.healthcarepathfinder.com