A Healthcare Flexible Spending Account, or "FSA," is a pre-tax benefit account that you can use to pay for eligible medical, dental, and vision care expenses that aren’t covered by your health insurance plan. You decide how much to contribute to your Healthcare FSA each year, and funds are withdrawn automatically from each paycheck for deposit into your account before taxes are deducted. The total amount you elect to contribute to your Healthcare FSA each year is available on the first day of your plan year.
Generally, you need to spend the funds in your Healthcare FSA within the plan year. However, your employer may provide you a grace period of 2-½ months after the end of the plan year to spend funds left in your account. Or your employer may allow you to carry over up to $500 left in your account into the next plan year.
A lot of different kinds, you would be surprised. Your Healthcare FSA covers hundreds of eligible healthcare expenses, like co-payments for doctor visits, prescription drugs, and new eyeglasses or contact lenses.
Here's a handy list of eligible expenses to review, download, or print out for future reference. Please keep in mind that IRS rules determine which expenses are eligible, and some expenses require a doctor's note or prescription to be eligible for reimbursement under your Healthcare FSA.
Your Healthcare FSA does not cover these expenses:
Looking for a particular type of expense? Please check the list of eligible expenses or log into your WageWorks account for a comprehensive list of eligible expenses under your particular Healthcare FSA.
There are several ways you can use the funds in your Healthcare FSA:
It depends on the type of Healthcare FSA program your employer has in place. There are three scenarios for funds that are left unspent in your account at the end of the plan year:
Your employer decides on which type of FSA account they offer. To find out which scenario applies to you, log into your WageWorks account or ask your employer.
Sorry, you can only change the amount you contribute to your Healthcare FSA if you meet one of these special circumstances, which are determined by the IRS:
If you believe you qualify for a change of your election, please contact your employer. To make sure you’re contributing the right amount to your Healthcare FSA—neither too much nor too little—we recommend that you carefully estimate your healthcare expenses prior to your company’s next Open Enrollment period, at which time you can adjust your election amount for the next plan year.
Sorry, you can only change you election if you meet any of these special circumstances, which are determined by the IRS:
If you believe you qualify for a change of your election, please contact your employer. And if your employer offers carryover, don't forget you can carry over up to $500 of unused funds into the next plan year, so you won't lose them, even if you don't spend them in the first year.
There are two ways to submit a receipt for reimbursement:
If you don’t re-elect a Healthcare FSA, your employer may make some options available to you, including:
Ask your employer which option applies to you.
If your employer offers a Healthcare FSA with Carryover, you should elect an HSA-Compatible FSA for the new plan year so you can carry over up to $500 and contribute to an HSA to maximize your savings. If you don’t enroll in an HSA-Compatible FSA, you forfeit the remaining balance in your Healthcare FSA.
There are two ways to fund your HSA:
And keep in mind that you only have access to the funds that have been deducted from your paycheck. Your HSA does not fully fund on the first day of the plan year.
For 2016, the annual contribution limits are: $3,350 if you are covered by an individual HDHP policy $6,750 if you are covered by a family HDHP policy. Exception: If you are age 55 or older as of December 31, 2015, you may contribute an extra $1,000 as a catch-up deduction under both individual and family policy coverage for 2016.
For 2017, the annual contribution limits are: $3,400 if you are covered by an individual HDHP policy or $6,750 if you are covered by a family HDHP policy. Exception: If you are age 55 or older as of December 31, 2016, you may contribute an extra $1,000 as a catch-up deduction under both individual and family policy coverage for 2017.
These limits are set by the IRS and may change year to year.
There are two ways to make additional contributions to your WageWorks HSA.
Yes, you can contribute to your HSA as long as you are an eligible individual and have not enrolled in Medicare Part A, B, or D. Once you enroll in Medicare you may no longer contribute to your HSA.
For example, if you enroll in Medicare on July 21, you are no longer eligible to contribute to an HSA as of July 1. Your maximum contribution for that year would be for 6 months of that year (you were eligible the first six months of the year.) Remember to also include ½ of the catch-up amount for that year.
If you turn age 65 and are still working and are not enrolled in Medicare, you are still eligible to contribute to your HSA.
If you enroll in a qualified HDHP midyear,* you may still make the maximum annual contribution into your HSA. However, you must remain enrolled in the plan until the end of the following calendar year in order to avoid potential tax issues.
* You need to enroll in a qualified HDHP prior to December 1.
You'd be surprised by how many different kinds of expenses are covered under an HSA. Check out this list of eligible expenses.
In general, you can use your HSA to pay for any qualified medical expense. Qualified medical expenses are defined by the IRS and include medical care, vision and dental care expenses, prescription drugs, and payments for long term care services and insurance.
An HSA may reimburse certain types of insurance premiums, such as COBRA continuation, or any health insurance plan maintained while receiving unemployment compensation under federal or state law for the HSA holder or for his/her spouse or dependents. If you have an HSA and are age 65 or older (whether or not you’re entitled to Medicare), you may use your HSA to pay for any deductible health insurance, such as retiree medical coverage other than a Medicare supplemental policy.
Generally, you cannot treat insurance premiums as qualified medical expenses unless the premiums are for:
a. Long-term care insurance, subject to IRS mandated limits based on age and adjusted annually (see IRS Publication 502: Long-Term Care).
b. Healthcare continuation coverage (such as coverage under COBRA – see IRS Publication 502: COBRA Premium Assistance.
c. Healthcare coverage while receiving unemployment compensation under federal or state law.
d. Medicare and other healthcare coverage if you are 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap).
For (b) and (c) above, your HSA can be used for your spouse or a dependent meeting the requirement for that type of coverage. For (d) above, if you, the account beneficiary, are not 65 years of age or older, Medicare premiums for coverage of your spouse or a dependent (who is 65 or older) generally are not considered a qualified medical expenses.
Yes, you can withdraw funds from your HSA at any time. But please keep in mind that if you use your HRS funds for any reason other than to pay for a qualified medical expense, those funds will be taxed as ordinary income, and the IRS will impose a 20% penalty.
After you reach age 65 or if you become disabled, you can withdraw HSA funds without penalty but the amounts withdrawn will be taxable as ordinary income.
Yes, the law allows a one-time transfer of IRA assets to fund an HSA.
The amount transferred may not exceed the amount of one year’s contribution and individuals must be otherwise eligible to open an HSA. Transfers are not taxable as IRA distributions. However, amounts transferred into an HSA from an IRA are not deductible. IRS Publication 969 provides more information.
At age 65, you can withdraw your HSA funds for non-qualified expenses at any time although they are subject to regular income tax. You can avoid paying taxes by continuing to use the funds for qualified medical expenses.
For if you are age 65 or older, premiums for Medicare Part A, B, C or D, Medicare HMO, and employee premiums for employer-sponsored health insurance can be paid from an HSA.
Select your qualified high-deductable health plan and with it, your HSA, either for yourself (individual) or your family during Open Enrollment. Once the plan year starts, you can access your WageWorks HSA by logging into your WageWorks account. You may need to first register for your account.
Your pre-tax contributions via payroll deductions fund an HSA with BNY Mellon, but you can establish an HSA with a qualified HSA trustee or custodian of your choice. This is typically a bank or brokerage firm. Funds remain tax-free, assuming distributions are only taken for eligible healthcare expenses.
It’s easy. Simply decide how much you want to contribute to your HSA each year and funds are automatically withdrawn from your paycheck for deposit into your account before taxes are deducted. This means you pay less in taxes and take home more of your pay.
HSA contributions are deposited in an FDIC-insured, interest-bearing account from which you can draw from at any time. You can choose how much you would like to invest and how much you would like to keep available for your eligible medical expenses. Any funds you put into your HSA and don't use during the plan year stays with you, even if you change employers or retire. And it's there for you today, tomorrow, or anytime in the future.
WageWorks has partnered with BNY Mellon to ensure that your money is safe and secure. To start investing with BNY Mellon, you need a minimum of $1,000 in your account.
To qualify and be eligible to make contributions into an HSA, you must meet all of the following conditions:
A qualified high-deductible health plan, or “HDHP,” is a type of health insurance plan. While an HDHP has a higher annual deductible than a traditional insurance plan, it also offers tremendous savings, including:
It depends. If your spouse has an individual health insurance policy with no other insurance, and you are enrolled in a high-deductible health plan, then yes, you are eligible to participate in an HSA.
But if your spouse participates in a Healthcare FSA or HRA, and those benefits cover your healthcare expenses too, then no, you are not eligible to participate an HSA. Why? Even though you are not covered by your spouse’s health insurance, the IRS considers your spouse’s Healthcare FSA or HRA to be “other insurance.”
An exception would be if your spouse has an HSA-Compatible FSAs or what’s sometimes referred to as a “limited-purpose” HRA that covers vision and dental care expenses only. If your spouse participates in either an HSA-Compatible FSA or a limited-purpose HRA, then yes, you may participate in an HSA.
If your spouse has a traditional health insurance plan, such as a PPO or HMO, that provides individual coverage only, then yes, you are eligible to participate in an HSA, but only if you are enrolled a high-deductible health plan and your spouse doesn’t also have a Healthcare FSA or HRA that covers your healthcare care expenses.
If your spouse has a traditional health insurance plan that provides family coverage, and you have not exempted from that coverage, then no, you are not eligible to participate in an HSA. However, if your spouse has a traditional health insurance plan that covers him/her and your children only, then you are eligible to participate in an HSA.
This is one of the best things about an HSA: it's yours! Your HSA is yours and yours alone. It is yours to keep, even if you resign, are terminated, retire from, or change your job. You keep your HSA and all the money in it, but keep in mind that there may be nominal bank fees if you are no longer enrolled in your HSA through your employer.
You can even use your HSA to pay for long-term care insurance, COBRA premiums, or other health insurance premiums if you’re receiving unemployment benefits.
Almost anyone can contribute to your HSA—you, your spouse, your employer, your family members. For example, if you enrolled in an HSA through your employer, both you, as the employee, and your employer may make contributions. Additionally, your spouse may contribute to your HSA on behalf of other family members (e.g., your children) as long as the other family members are covered under the high-deductible health plan and are not otherwise insured.
An HSA-Compatible FSA is a Flexible Spending Account (FSA) that is compatible with a Health Savings Account (HSA). If you’re enrolled in a qualified high-deductible health plan and have an HSA, you can maximize your savings by pairing your HSA with an HSA-Compatible Flexible Spending Account (FSA). This pre-tax benefit account lets you take advantage of the savings power of an HSA and a Healthcare FSA simultaneously. An HSA-Compatible FSA is sometimes referred to as a “limited purpose” FSA because it is used to pay for eligible dental and vision care expenses only.
You decide how much to contribute to your HSA-Compatible FSA each year, and funds are withdrawn automatically from each paycheck for deposit into your account before taxes are deducted. The total amount you elect to contribute is available on the first day of your plan year. Generally, you need to spend the funds in your HSA-Compatible FSA within the plan year. However, your employer may allow you a grace period of 2½ months after the end of the plan year to spend funds left in your account. Or your employer may allow you to carry over up to $500 left in your account into the next plan year.
You fund your HSA-Compatible FSA through your employer. During your company's Open Enrollment period, you tell your employer how much you would like to contribute to your account for the coming year. The maximum amount you can contribute is determined by the IRS. For 2015, it is $2,550. Your employer then deducts your contribution amount (in equal portions) from your paychecks throughout the plan year.
Good news! You don't have to wait for funds to build up in your HSA-Compatible FSA. Your entire annual election amount is available to you on the first day of your plan year.
It depends on the type of HSA-Compatible FSA program your employer has in place. There are three scenarios for funds that are left unspent in your account at the end of the plan year:
There are three ways to use your HSA-Compatible FSA to pay for dental and vision care expenses:
Your employer and IRS Regulations determine which expenses are eligible for reimbursement under your HRA. However, most HRAs do not cover:
To find out which expenses are eligible under your particular HRA, please review this list or log into your WageWorks account to see the list of your eligible expenses.