Could I enroll now and immediately start using the FSA or HSA? I would like to get braces. Also, if I enroll in an FSA, what happens when you switch jobs?
@@TiarraEss If you enroll now for 2022, you would not be able to use the funds until 2022 when they start deducting the amount from your paycheck. For switching jobs, you generally still have until the end of the tax year to use up funds from the FSA account, but you will want to check with your HR department on any specific rules they have.
Yeah, they can be a bit confusing at first. The main difference is that an HSA is tied to a high-deductible health plan (HDHP), and you can roll over the funds year after year. An FSA, on the other hand, is usually a “use-it-or-lose-it” deal, where you have to spend the money within the plan year.
That’s right. I learned the hard way a few years ago when I didn’t use all my FSA funds and lost a chunk of money. Since then, I’ve switched to an HSA, and I love that I can carry the balance over. Plus, the funds in an HSA can be invested, which is a nice bonus.
I’ve been using an HSA for a while now, and I agree-it’s a great option, especially if you’re healthy and don’t have a lot of medical expenses each year. The tax benefits are also better with an HSA since contributions are tax-deductible, and withdrawals for qualified expenses are tax-free.
Both FSAs and HSAs have tax advantages, but the flexibility of an HSA is what sets it apart for me. I’ve been able to build up a decent amount in my HSA over the years, and I feel more secure knowing it’s there for future medical expenses, or even as another way to save for retirement.
If you know you’ll use up the funds in a year, an FSA could work well. But if you’re thinking long-term and want the option to save and invest, the HSA might be the better choice.
I have both! One for dental and vision and the other for medical only. The HSA for medical and a Partial FSA for dental and vision. I save a lot on taxes by doing both
Most dont qualify for either. A qualifying plan for HSA is really just a bad health insurance plan bc a high deductible means coverage is limited, and you'd be on the hook for the whole deductible if you had a major medical episode, which could be as much as $6,000.
@mellowc Thanks for your question. You can either contribute via one lump sum (which could be at the beginning of the year), set up Direct Deposit from each paycheck, or schedule a recurring monthly deposit via your own bank account. Once the funds are deposited into your HSA, they are available for immediate use. Thanks!
Hi @shaderrrr1 - Sorry, for compliance reasons, we are unable to provide financial or investment advice. If you are interested in hiring a financial advisor, feel free to set up a discovery call here - districtcapitalmanagement.com/schedule-call/
I have HMO insurance w a High deductive plan of $3,000 w my employer. per IRS it looks like i'm eligible for an HSA because my deductible is $3k (consider high) however my plan does not specify is HSA eligible from my employer. Question: Can I still have an HSA from any other provider such as fidelity to contribute now and use the tax benefits for 2021?!
i think it is still depend, for example my case that I have a young kid and my wife is pregnancy's I will definitely spent a lot of money on medical so I should choose a plan that cost less than high deductible plan to eligible for HSA. so I could of save a lot more money
Question about FSA. I usually budget every year with that I plan on use my FSA for. If I'm still not sure on the amount to contribute, is it bests to just max it out? You said the higher the contribution the lower the taxable income.
Thanks for your question. To change your Health Savings Account (HSA) provider from PayFlex to a different provider, you'll typically need to go through your employer, as they are the ones who establish and manage the HSA program for their employees. Have a great day!
Thanks for your question. The dependent care FSA can only be used for childcare costs. However, you can use the funds in your FSA to pay for certain medical and dental expenses for your dependents.
To determine if your health plan is considered a High Deductible Health Plan (HDHP), you can review the plan documents or contact your health insurance provider directly. Here are some steps you can take to find out: Review Plan Documents: Start by reviewing the summary of benefits or plan documents provided by your health insurance provider. These documents typically outline the details of your health plan, including the deductible, out-of-pocket maximum, and coverage details. Look for information that indicates whether the plan qualifies as an HDHP. Check the Deductible Amount: HDHPs have higher deductibles compared to traditional health plans. The deductible is the amount you must pay out of pocket before the insurance coverage kicks in. If your plan has a higher deductible than the minimum threshold set by the Internal Revenue Service (IRS), it may qualify as an HDHP. Verify HSA Eligibility: HDHPs are typically paired with Health Savings Accounts (HSAs). HSAs are tax-advantaged savings accounts that allow you to contribute pre-tax dollars to cover qualified medical expenses. If your plan is eligible for an HSA, it is likely an HDHP. Check if your plan meets the IRS requirements for HSA eligibility, including the minimum deductible and out-of-pocket maximum limits. Consult Your Insurance Provider: If you are still unsure whether your plan qualifies as an HDHP, reach out to your health insurance provider's customer service or contact a representative who can provide you with accurate information. They can clarify whether your plan meets the criteria for an HDHP and answer any specific questions you may have.
Hi Veronica, you easily open an HSA directly through an HSA provider. There are actually many options. Look for ones where you'll have the ability to invest in stocks. We advise clients on this, if that's something you're interested in. districtcapitalmanagement.com
I have two: One with Fidelity (for investment) and one with my local bank (for saving/quick access). I roll money over from my savings/clearing-house HSA to my investment HSA exactly once per year (the maximum number of times for me) so that the money in my savings HSA is not less than my health insurance policy's annual out-of-pocket maximum plus a buffer. If you do likewise, make sure to ask for a roll-over (exactly the terminology) and that you will not have your savings account closed, incur any penalties or deleterious tax implications, etc. Also, make sure that you do not contribute more than the annual maximum to your HSAs in total; a roll-over should not count toward that (only new contributions will), but you should explicitly check.
Yes, I would recommend that you look at the most up to date HSA FSA qualified expenses list. Here is a good overview: www.cigna.com/individuals-families/member-guide/eligible-expenses Have a great day!
Sorry if I missed it but you mentioned that you treat your HSA as a retirement vehicle -- does that means we can withdraw for non-healthcare expenses as long as it's after retirement age? Thanks
Hi Oliver! After age 65, you can withdraw funds from an HSA for any reason with no IRS penalty. You will still pay ordinary income tax on any withdrawals that are not used for medical expenses.
Do I get the money back for the year in Healthcare FSA through employer if I havent used any of it? Or does it automatically goes towards next year? @DistrictCapital
The rules regarding the use of funds in a Healthcare Flexible Spending Account (FSA) can vary depending on your employer's specific policies. Typically, funds contributed to an FSA are subject to a "use-it-or-lose-it" rule, meaning that any money remaining in the account at the plan year's end is forfeited. However, there are some exceptions and options that may apply: Grace Period: Some employers offer a grace period that allows employees to use the funds remaining in their Healthcare FSA for a certain period after the plan year ends. This grace period is typically up to two and a half months. If your employer provides a grace period, you would have extra time to utilize the funds for eligible healthcare expenses incurred during that period. Rollover: Another option available to employers is the rollover provision, which allows a portion of unused funds to carry over into the next plan year. The maximum amount eligible for rollover is typically $500, but this may vary depending on the employer's plan design. If your employer offers the rollover provision, the unused funds, up to the maximum allowed, would be carried over into the next year and added to your new FSA balance. Limited Grace Period or Rollover: Some employers may provide either a grace period or a rollover provision, but not both. In such cases, it's important to understand your employer's specific rules and limitations. To know the exact details about how your Healthcare FSA works and whether there is a grace period, rollover provision, or any other specific rules, it's best to consult your employer's benefits department or refer to the plan documents they provide. They will be able to provide you with the most accurate information regarding your specific FSA and its policies.
Expenses related to surgery are generally considered eligible for reimbursement from a Health Savings Account (HSA). HSA funds can be used to pay for medical expenses that are considered deductible under the Internal Revenue Code Section 213(d). This includes expenses for the diagnosis, cure, mitigation, treatment, or prevention of disease or for the purpose of affecting any structure or function of the body. Surgical procedures, including the costs associated with the surgery itself, such as surgeon fees, anesthesiologist fees, hospital charges, and other related expenses, are typically considered eligible expenses for HSA reimbursement. However, it's important to note that cosmetic surgeries that are solely for aesthetic purposes and not for the treatment or prevention of a medical condition are generally not considered eligible for HSA reimbursement. As with any HSA expense, it is important to keep documentation of the surgical expenses, such as itemized bills, receipts, and any other supporting documents, for tax purposes. It's also recommended to consult with a tax professional or refer to the IRS guidelines to ensure that specific expenses meet the eligibility criteria for HSA reimbursement.
It shouldn't be any different, though it may depend on what the reimbursement is for. You may want to ask your FSA/HSA company for clarification on what is needed. Reimbursement itself would usually go to a US bank account. My co-worker used her former dependent care FSA for an off-base Japanese pre-school and had no issues with reimbursement.
Yes, you can take an HSA while your wife takes an FSA, provided that you both meet the eligibility criteria for each account type. However, it's advisable to consult with a financial advisor, as they can provide personalized recommendations on which accounts suit your needs and circumstances best. Have a great day!
1) You are not taxed on the contributions you make into an HSA account, as this is your pre-tax funds going into the account. 2) Health SAVINGS account balances can grow based on the investments and interest rates you have with your provider, and the gains you make are tax-free 3) Qualified withdrawals and expenditures are also tax-free (you're not taxed if you take out your money for a qualified reason).
With FSA's you "use it or lose it" if you dont use all your contributions in your current year. HSA's carry over. Plus good tax deduction when you contribute AND when you pay for medical appointments, copays or meds using the HSA for the SAME money. If you are an independent contractor or self-employed, that is cool. If you are an employee, you lower your tax burden.
I unfortunately switched from FSA to HSA last year (2022). Since the year for the market was a disaster I lost a lot of money. My suggestion is not to use a very risky tool such as HSA. You can lose all of your contributions instead of getting the solid amount as a return from FSA.
What other questions do you have about HSA and FSA that we can answer?
Is each individual/person eligible for an hsa
@@shoutz1957 Each spouse can have their own HSA, but the combined maximum contribution is $7200 for 2021 and $7300 for 2022.
Thank you for the reply
Could I enroll now and immediately start using the FSA or HSA? I would like to get braces.
Also, if I enroll in an FSA, what happens when you switch jobs?
@@TiarraEss If you enroll now for 2022, you would not be able to use the funds until 2022 when they start deducting the amount from your paycheck.
For switching jobs, you generally still have until the end of the tax year to use up funds from the FSA account, but you will want to check with your HR department on any specific rules they have.
Good video, I’ve been looking into setting up a health savings account, but I’m getting confused between an FSA and an HSA.
Yeah, they can be a bit confusing at first. The main difference is that an HSA is tied to a high-deductible health plan (HDHP), and you can roll over the funds year after year. An FSA, on the other hand, is usually a “use-it-or-lose-it” deal, where you have to spend the money within the plan year.
That’s right. I learned the hard way a few years ago when I didn’t use all my FSA funds and lost a chunk of money. Since then, I’ve switched to an HSA, and I love that I can carry the balance over. Plus, the funds in an HSA can be invested, which is a nice bonus.
I’ve been using an HSA for a while now, and I agree-it’s a great option, especially if you’re healthy and don’t have a lot of medical expenses each year. The tax benefits are also better with an HSA since contributions are tax-deductible, and withdrawals for qualified expenses are tax-free.
Both FSAs and HSAs have tax advantages, but the flexibility of an HSA is what sets it apart for me. I’ve been able to build up a decent amount in my HSA over the years, and I feel more secure knowing it’s there for future medical expenses, or even as another way to save for retirement.
If you know you’ll use up the funds in a year, an FSA could work well. But if you’re thinking long-term and want the option to save and invest, the HSA might be the better choice.
I have both! One for dental and vision and the other for medical only. The HSA for medical and a Partial FSA for dental and vision. I save a lot on taxes by doing both
Fantastic! Thanks for sharing.
If you are young and has no major health issue, choosing HDHP and HSA definitely wins out.
If you are 50, a HDHP is a crappy health insurance plan. I WANT to have a HSA but dont qualify bc my plan is not eligible. It covers too much.
It’s also beneficial if you have many health problems or take medications
Most dont qualify for either. A qualifying plan for HSA is really just a bad health insurance plan bc a high deductible means coverage is limited, and you'd be on the hook for the whole deductible if you had a major medical episode, which could be as much as $6,000.
Are vitamins and sups now eligible? I saw them listed on the FSA and HSA Amazon store
Yes, some vitamins and sups are now HSA eligible. Thanks!
Do you put money in the HSA in one amount at beginning of year or does it go in each check and available as you put in?
@mellowc Thanks for your question. You can either contribute via one lump sum (which could be at the beginning of the year), set up Direct Deposit from each paycheck, or schedule a recurring monthly deposit via your own bank account. Once the funds are deposited into your HSA, they are available for immediate use. Thanks!
I believe you purchase vitamins if you have a written statement from your provider that you need it (or something to that effect).
Answered every question I had. So organized and informative. Thank you!
Thank you for your kind comment. I appreciate it!
Hi! Would you choose PPO or HSA/HDHP if the PPO was $67/month with a $250 deductible or the HDHP was $1500 deductible and $37/month?
Hi @shaderrrr1 - Sorry, for compliance reasons, we are unable to provide financial or investment advice. If you are interested in hiring a financial advisor, feel free to set up a discovery call here - districtcapitalmanagement.com/schedule-call/
Mine is a use it or lose it at the end of the year.
I have HMO insurance w a High deductive plan of $3,000 w my employer. per IRS it looks like i'm eligible for an HSA because my deductible is $3k (consider high) however my plan does not specify is HSA eligible from my employer. Question: Can I still have an HSA from any other provider such as fidelity to contribute now and use the tax benefits for 2021?!
Thanks. The bonus tip at the end answered my question
Perfect. Glad we could help!
Thank you for the information I've learned a lot! Please enlighten me about this Tax-sheltered retirement plan. Thank you
Thank you for such an easy explanation of this. 😊
Thank you for your kind comment. I'm glad you found the video useful. Have a great week!
i think it is still depend, for example my case that I have a young kid and my wife is pregnancy's I will definitely spent a lot of money on medical so I should choose a plan that cost less than high deductible plan to eligible for HSA. so I could of save a lot more money
Question about FSA. I usually budget every year with that I plan on use my FSA for. If I'm still not sure on the amount to contribute, is it bests to just max it out? You said the higher the contribution the lower the taxable income.
I have a high copay bill $3000 . How reimbursement work if I submit a deduction directly to 26 pay period?
Thank you, very helpful.
I am glad that you found this video helpful. Have a wonderful day!
great video - thank you!
You're welcome!
Currently my employer provides 'PayFlex' as the HSA account but how can i change to a differ provider? will i can do it or only my Employer can do it?
Thanks for your question. To change your Health Savings Account (HSA) provider from PayFlex to a different provider, you'll typically need to go through your employer, as they are the ones who establish and manage the HSA program for their employees.
Have a great day!
Hi! I have the option to enroll in both an HSA and a limited FSA. Would you recommend I do both or just HSA?
It really depends on your situation. You can also read our blog for a more detailed overview - districtcapitalmanagement.com/hsa-vs-fsa/
Can the dependent care fsa be used for the dependent medical cost or only on childcare cost? Thanks bunches!
Thanks for your question. The dependent care FSA can only be used for childcare costs. However, you can use the funds in your FSA to pay for certain medical and dental expenses for your dependents.
How do I know if my health plan is considered a HDHP?
To determine if your health plan is considered a High Deductible Health Plan (HDHP), you can review the plan documents or contact your health insurance provider directly. Here are some steps you can take to find out:
Review Plan Documents: Start by reviewing the summary of benefits or plan documents provided by your health insurance provider. These documents typically outline the details of your health plan, including the deductible, out-of-pocket maximum, and coverage details. Look for information that indicates whether the plan qualifies as an HDHP.
Check the Deductible Amount: HDHPs have higher deductibles compared to traditional health plans. The deductible is the amount you must pay out of pocket before the insurance coverage kicks in. If your plan has a higher deductible than the minimum threshold set by the Internal Revenue Service (IRS), it may qualify as an HDHP.
Verify HSA Eligibility: HDHPs are typically paired with Health Savings Accounts (HSAs). HSAs are tax-advantaged savings accounts that allow you to contribute pre-tax dollars to cover qualified medical expenses. If your plan is eligible for an HSA, it is likely an HDHP. Check if your plan meets the IRS requirements for HSA eligibility, including the minimum deductible and out-of-pocket maximum limits.
Consult Your Insurance Provider: If you are still unsure whether your plan qualifies as an HDHP, reach out to your health insurance provider's customer service or contact a representative who can provide you with accurate information. They can clarify whether your plan meets the criteria for an HDHP and answer any specific questions you may have.
You can’t just sign up for a HSA. You need to have a HDHP firstly, and it’s also quite expensive out of pocket.
How would I go about opening an HSA if my employer doesn't offer it?
Hi Veronica, you easily open an HSA directly through an HSA provider. There are actually many options. Look for ones where you'll have the ability to invest in stocks. We advise clients on this, if that's something you're interested in. districtcapitalmanagement.com
I have two: One with Fidelity (for investment) and one with my local bank (for saving/quick access). I roll money over from my savings/clearing-house HSA to my investment HSA exactly once per year (the maximum number of times for me) so that the money in my savings HSA is not less than my health insurance policy's annual out-of-pocket maximum plus a buffer. If you do likewise, make sure to ask for a roll-over (exactly the terminology) and that you will not have your savings account closed, incur any penalties or deleterious tax implications, etc. Also, make sure that you do not contribute more than the annual maximum to your HSAs in total; a roll-over should not count toward that (only new contributions will), but you should explicitly check.
I'm assuming alot of the stuff that wasn't eligible for hsa fsa coverage is now.
Yes, I would recommend that you look at the most up to date HSA FSA qualified expenses list. Here is a good overview: www.cigna.com/individuals-families/member-guide/eligible-expenses
Have a great day!
Sorry if I missed it but you mentioned that you treat your HSA as a retirement vehicle -- does that means we can withdraw for non-healthcare expenses as long as it's after retirement age? Thanks
Hi Oliver! After age 65, you can withdraw funds from an HSA for any reason with no IRS penalty. You will still pay ordinary income tax on any withdrawals that are not used for medical expenses.
and who wouldnt likely have some medical expenses at 65! thanks
@@DistrictCapital
Do I get the money back for the year in Healthcare FSA through employer if I havent used any of it? Or does it automatically goes towards next year?
@DistrictCapital
The rules regarding the use of funds in a Healthcare Flexible Spending Account (FSA) can vary depending on your employer's specific policies. Typically, funds contributed to an FSA are subject to a "use-it-or-lose-it" rule, meaning that any money remaining in the account at the plan year's end is forfeited. However, there are some exceptions and options that may apply:
Grace Period: Some employers offer a grace period that allows employees to use the funds remaining in their Healthcare FSA for a certain period after the plan year ends. This grace period is typically up to two and a half months. If your employer provides a grace period, you would have extra time to utilize the funds for eligible healthcare expenses incurred during that period.
Rollover: Another option available to employers is the rollover provision, which allows a portion of unused funds to carry over into the next plan year. The maximum amount eligible for rollover is typically $500, but this may vary depending on the employer's plan design. If your employer offers the rollover provision, the unused funds, up to the maximum allowed, would be carried over into the next year and added to your new FSA balance.
Limited Grace Period or Rollover: Some employers may provide either a grace period or a rollover provision, but not both. In such cases, it's important to understand your employer's specific rules and limitations.
To know the exact details about how your Healthcare FSA works and whether there is a grace period, rollover provision, or any other specific rules, it's best to consult your employer's benefits department or refer to the plan documents they provide. They will be able to provide you with the most accurate information regarding your specific FSA and its policies.
Is surgery deductible payment eligible for HSA? Thank you
Expenses related to surgery are generally considered eligible for reimbursement from a Health Savings Account (HSA). HSA funds can be used to pay for medical expenses that are considered deductible under the Internal Revenue Code Section 213(d). This includes expenses for the diagnosis, cure, mitigation, treatment, or prevention of disease or for the purpose of affecting any structure or function of the body.
Surgical procedures, including the costs associated with the surgery itself, such as surgeon fees, anesthesiologist fees, hospital charges, and other related expenses, are typically considered eligible expenses for HSA reimbursement. However, it's important to note that cosmetic surgeries that are solely for aesthetic purposes and not for the treatment or prevention of a medical condition are generally not considered eligible for HSA reimbursement.
As with any HSA expense, it is important to keep documentation of the surgical expenses, such as itemized bills, receipts, and any other supporting documents, for tax purposes. It's also recommended to consult with a tax professional or refer to the IRS guidelines to ensure that specific expenses meet the eligibility criteria for HSA reimbursement.
Great information
Thank you very much. Have a great day!
If I'm investing the money in my HSA, is it better to pay for medical expenses with the HSA or cash so I can continue to get the HSA tax-free growth?
Hello Kateri, this can depend, but generally we recommend that people continue to grow their HSA tax free and pay cash for current medical expenses.
@@DistrictCapital Could you explain more on this? If I pay cash then it is not from HSA account and I would loose tax advantage on that cash payment.
If I have an option for both FSA and HSA, can I opt for both? For doctor copay and deductible, can I use FSA if I'm on High Deductible Health Plan?
Hello Shashin, thanks for the question! You can only participate in an HSA or Medical FSA, you cannot contribute to both.
Good stuff
Thank you!
How does the reimbursement work if you are posted overseas?
It shouldn't be any different, though it may depend on what the reimbursement is for. You may want to ask your FSA/HSA company for clarification on what is needed. Reimbursement itself would usually go to a US bank account. My co-worker used her former dependent care FSA for an off-base Japanese pre-school and had no issues with reimbursement.
I drink vitamin D everyday too!
1000 or 2000 IU? :)
Can I take HSA and my wife take FSA ? Will that work or doable
Yes, you can take an HSA while your wife takes an FSA, provided that you both meet the eligibility criteria for each account type. However, it's advisable to consult with a financial advisor, as they can provide personalized recommendations on which accounts suit your needs and circumstances best. Have a great day!
Can you explain triple tax advantage?
1) You are not taxed on the contributions you make into an HSA account, as this is your pre-tax funds going into the account.
2) Health SAVINGS account balances can grow based on the investments and interest rates you have with your provider, and the gains you make are tax-free
3) Qualified withdrawals and expenditures are also tax-free (you're not taxed if you take out your money for a qualified reason).
What happens when you have a health plan that qualifies for FSA and your spouse has a health plan that qualifies for HSA?
With FSA's you "use it or lose it" if you dont use all your contributions in your current year. HSA's carry over. Plus good tax deduction when you contribute AND when you pay for medical appointments, copays or meds using the HSA for the SAME money. If you are an independent contractor or self-employed, that is cool. If you are an employee, you lower your tax burden.
Hilda doesnt like HSAs
Go HSA it doesn’t expire FSA is use it or lose it
Actually, you can purchase through Thorpe Vitamins and use your HSA.
Use or lose it, I lost $1000 last year! Cigna!
They should just allow HSA for all, and everything should roll, and be used irregardless of year of service.
Thank you for this information, but all of this just to have the right to healthcare!?
I unfortunately switched from FSA to HSA last year (2022). Since the year for the market was a disaster I lost a lot of money. My suggestion is not to use a very risky tool such as HSA. You can lose all of your contributions instead of getting the solid amount as a return from FSA.
does nothing to compare HSA vs FSA. just talks about HSA