Your FSA can also reimburse out-of-pocket expenses not covered by health insurance plans, such as contact lenses and hearing aids, weight loss programs and fitness activities. Receipts may need to be submitted in order for reimbursement; or alternatively a debit card could be available so expenses can be paid as they arise.
An FSA (healthcare spending account) is an employer-sponsored benefit that allows you to set aside pre-tax money to cover medical expenses that arise outside of health insurance coverage. Depending on the scope and tax status of eligible expenses, an FSA can be an effective savings tool; but you need to be smart when using one; here are some strategies to help maximize it and use your FSA wisely.
FSAs can save on average 30 percent1 on healthcare costs when used strategically. By tracking spending, understanding rules, and using an FSA management platform online, FSAs offer incredible potential savings that you should put to use right away.
People considering an FSA typically focus on what expenses it can be used for. While the list has grown over time, restrictions must still be considered; generally speaking, FSA funds may be spent on prescription medications and co-pays as well as over-the-counter (OTC) items such as allergy and sinus medicines, first aid supplies, home COVID-19 tests, digestive health products and much more.
After using your FSA funds in one year, any leftover funds must be used or they will expire and you risk forfeiting them. Some employers allow employees to roll unused funds over for up to two and half months into the following year; but it’s important to remember that enrolling simultaneously in both a health care FSA and Health Savings Accounts (HSAs) would be impossible; though a Limited Purpose FSA might make for a great complementary solution.
An HSA and FSA differ significantly in that you cannot contribute to an FSA if your health plan has a deductible of $1,350 or higher; however, an HSA contribution remains allowed if your deductible falls between $1350 and $2,000.
Before choosing an FSA, it’s important to assess both its benefits and costs carefully. An FSA may be an ideal way to cover anticipated out-of-pocket medical expenses as well as annual enrollment contributions during an open enrollment period. Furthermore, having high deductible Marketplace health insurance plans makes an FSA especially helpful as you could use pretax dollars instead of your tax refund to cover premiums and out-of-pocket costs incurred without it.