In today’s world, there are many healthcare savings options. Healthcare can be an expensive necessity, so having a way to save is helpful, but, with all the choices, you may be wondering which type of account is best for you.
Flexible Spending Accounts (FSAs) are an excellent way to use pretax dollars to pay for healthcare costs you would pay for anyway. As with any type of account, there are specific qualifications you have to meet to utilize one. Read on to see if you qualify for an FSA.
What is a Flexible Spending Account?
A Flexible Spending Account (FSA) is a tax-exempt account, offered by employers that can be used for qualified health expenses. The money is deducted from your paycheck before taxes are taken out, saving you money while saving for healthcare expenses.
You can use the money in your FSA to pay for eligible medical, dental and vision care expenses that aren’t covered by your healthcare plan. It’s a smart, easy way to save money and keep your family healthy. A win-win.
Thousands of medical expenses, from products to procedures are covered, so if you’re eligible, take a close look to see if one makes sense for you.
Using your FSA account for healthcare related costs will help you save money. Here are some items you can use your FSA funds for.
- Preventative Care
- Routine Eye Exams
- Prescription Eyeglasses or
Everyday Healthcare Items:
- Children Sun Protection
- First Aid & Band-Aids
If you re-enroll, some FSAs offer up to a $500 carryover option or a grace period to use the money to mid-March of the following year. Employers can offer one of these options, but not both, and it is not required.
Does your employer offer a Flexible Spending Account?
If your company offers insurance, you’re eligible to enroll in an FSA. You do not have to enroll in an insurance plan, you just need to be offered insurance to be FSA eligible.
For those who are self-employed, FSAs are generally not an option. Though exceptions exist, self-employed employees and shareholders who own 2% or more in an S-Corp, LLC, LLP, PC, sole proprietorship, or partnerships are usually not eligible for FSAs. If you are self-employed, look into a Medical Savings Account (MSA).
HSA vs. FSA
If you already have a Health Savings Account (HSA) or are plan to get one, you will not be eligible for a Healthcare Flexible Spending Account (HCFSA). You cannot be enrolled in an HSA and an HCFSA at the same time. The only way to have an FSA and an HSA is to ensure that your FSA is limited purpose – covers only dental and vision, not medical.
However, you can enroll in a Child & Elderly Care FSA if you have an existing HSA.
Now that you know more about Flexible Spending Accounts, consider talking to your employer to get an FSA set up, your pocketbook will thank you!
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.