What’s the idea behind an FSA or HSA?
Both FSAs and HSAs are employer-sponsored savings plans that allow you to put money away for your yearly healthcare expenses. They’re great, because they allow you to save this money pre-tax, which means you don’t need to pay income tax to any funds deposited into these accounts. So, if your income tax rate is 30%, and you put $1,000 into an HSA or FSA account, you’ll save $300 because instead of that money going to the government, it will go to your healthcare needs. In most cases, you’ll get a debit card preloaded with the amount you set aside, and can use that card at your visits to pay for costs, just like you would a regular debit card.
What can I use my FSA or HSA funds to pay for?
In short, healthcare expenses. From a dental point of view, this includes any treatment fees for things like fillings or crowns, preventative care like cleanings and fluoride treatments, and any co-insurance payments you owe for your visits. You cannot use the funds for elective, cosmetic, treatments like teeth whitening or veneers. Your HR department or plan administrator should be able to provide you with a full list of expenses that can be paid for using your FSA or HSA.
What’s the difference between an FSA or HSA?
An FSA is a “flexible spending account” and an HSA is a “healthcare savings account. Not everyone will be eligible for an HSA. HSAs are only an option for people with a high deductible health insurance policy, and even then there are additional restrictions. FSAs have fewer limitations. The yearly maximum allowable contribution to an HSA ($3,400 for an individual) is higher than that of an FSA ($2,650). Additionally, an FSA doesn’t come with you if you change employers mid-year (unless you COBRA) but an HSA can move along side you if you get a new job.
Can I have both?
You can have both an FSA and an HSA if the FSA is a “limited” FSA to help with just dental and vision expenses.
This sounds good. Can I read all the nitty-gritty details on an official government website somewhere?
You sure can. The IRS has a comprehensive overview here.
Why should I care right now?
You should pay especially close attention if you have an FSA. While unused HSA benefits can be rolled over into the following year, FSA benefits do not. If you have an FSA, then any funds deposited into the account generally expire if unused. Some employers will offer exceptions to the FSA expiration in the form of a grace period or rollover benefits. The grace period gives you an extra 2.5 months to use your benefits before they expire, and the rollover allows you to carry up to $500 of expenses into the following year.
Our Treatment and Financial Coordinators are here to help! If you have 2017 funds remaining in your account, give us a call and we’ll see if you have any treatment that you could schedule to use those funds up. If you’re trying to calculate how much to add to your accounts for next year, we can give you estimated expenses based on your current insurance plan and treatment needs.