FSA

FSA FAQs

Employees in Preferred Provider Organization (PPO) health insurance plans usually enjoy co-pays and lower deductibles but pay higher premiums. To help offset these, they can reduce healthcare expenses with a tax-advantaged Flexible Spending Account (FSA). Here are answers to the FSA questions we get most frequently. FSA FAQs What is a Flexible Spending Account or … More >>

FSA

What happens to unspent FSA funds?

If you’re new to or unfamiliar with Flexible Spending Accounts (FSAs), there are some terms you need to know to help maximize the benefit of these tax-advantaged accounts. For example, when an FSA plan is set up, the employer has three options as to how to treat funds that haven’t been spent by the end … More >>

heart health

Heart Health and Your Benefits

Cardiovascular disease is the number one killer of women as well as men in the United States. February is American Heart Month, encouraging us all to learn more about our heart health. Let’s discuss a little about heart health and how your employer-sponsored benefit accounts may help. Women’s Heart Health Quick facts you need to … More >>

Consumer Directed Healthcare Account

The Value of Consumer Directed Healthcare Accounts

The infographic below details the value of consumer-directed healthcare accounts. Learn more from this overview of HSAs, HRAs, FSAs, and other helpful information. What is a Consumer Directed Healthcare Account? A consumer-directed healthcare (CDH) account is a type of medical savings account that: Helps pay for eligible medical expenses Offered through an employer (or, in … More >>

missed enrollment

Missed Open Enrollment?

As open enrollment winds down, some participants may determine that they have elected too much or too little coverage for next year, while others who ignored enrollment may wish they had chosen something. The good news is that options may still exist. Health Plans Current enrollees in an existing health plan may find that they … More >>

flu shots

Flu Shots for 2023-2024

Flu season can be miserable for everyone. Parents have to deal with sick kids at home. Employers have to arrange coverage for employees taking sick time. Doctors’ offices are hard to get into for an appointment. So, who should get flu shots? How much could it cost? Which shots are available where? How can an … More >>

contributions reimbursements

IRS Announces More 2024 Limits

Via Rev. Proc. 2023-34, the IRS released its 2024 annual contribution limits for Flexible Spending Accounts (FSAs), Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs), adoption assistance, and qualified transportation plans. 2024 FSAs The annual contribution limit for FSAs increased to $3,200, compared to $3,050 in 2023. For plans that include the Carryover option, that limit increased … More >>

movember mens health concerns

“Movember” Highlights Men’s Health Concerns

Each November, men across the globe observe the Movember awareness initiative by growing mustaches to highlight men’s health issues. Let’s discuss common men’s health concerns and how consumer-directed healthcare accounts can help address them. Men’s Cancer Concerns While men share many of the same cancer-related health concerns as women, they also have ones unique to … More >>

open enrollment

Getting Ready for Enrollment Season

Are you ready for enrollment season? Open enrollment is when you review your benefit options and choose which ones to renew or enroll in for the next year, like health insurance, life insurance, and tax-advantaged healthcare accounts. Whether you sign up for benefits through an employer or enroll through an exchange, you should be ready … More >>

Summary Plan Description

What is a Summary Plan Description?

If you receive healthcare benefits from your employer, you will also receive a Summary Plan Description (SPD). Required by law, the SPD defines plan eligibility and explains benefit calculations and payments, how to submit claims, when benefit guarantees begin, and more. Here’s what you need to know about your Summary Plan Description. Summary Plan Description … More >>

cafeteria

What is a Section 125 Plan?

Employers seek creative and effective support options for employee health, wellness, and financial needs, giving employees more benefit options than ever. Picking and choosing among them is somewhat like building a meal in a cafeteria line. This ability comes from the IRS’ Section 125, also known as the “Cafeteria Plan” provision. But what exactly do Section … More >>

fsa status change

FSA Status Changes and Contributions

In addition to health insurance eligibility, family status changes can impact consumer-directed healthcare accounts. Here’s how mid-year status changes affect FSA and Dependent Care accounts. Can I change my health FSA contributions? Employees may choose FSA participation during open enrollment. This includes deciding on an annual contribution amount up to the IRS-mandated maximum. Health FSA accounts … More >>

healthcare consumer

What is Healthcare Consumerism?

Healthcare consumerism is a movement to refine the efficiency and affordability of healthcare services by changing how people prioritize their healthcare. Imagine a system where patients are more knowledgeable and active in purchasing healthcare services.  Healthcare consumerism works to make this a reality. Healthcare Consumerism Basics At its core, healthcare consumerism seeks to make patients … More >>

Using Benefits to Increase Employee Satisfaction and Retention

Employers invest substantial time and money into employee benefits programs. Yet myths, misconceptions, and confusion may prevent employees from getting maximum and practical benefits from them. Effective communication and education can improve benefit utilization, employee satisfaction, and talent retention. FSAs and Employee Satisfaction Flexible Spending Accounts (FSAs) continue to be a popular benefit option. Yet, … More >>

Benefits for “Unretiring” Workers

Baby Boomers, born between 1946 and 1964, have significantly impacted American society and the workplace. A generation known for hard work and professional loyalty, many were forced to retire early due to pandemic-related concerns. However, many are now re-entering the workforce. Characteristics of the Baby Boomer Generation Although 65 is the traditional retirement age, the Bureau of … More >>

4 Things to Know About Limited-Purpose FSAs

Many of you are familiar with healthcare Flexible Spending Accounts (FSAs). Employees set aside a portion of their pay before taxes are calculated and use the money to pay eligible medical expenses. Less well-known is the Limited-Purpose FSA (LPFSA). Here are 4 things to know about limited-purpose FSAs. What do Limited-Purpose FSAs do? The LPFSA … More >>

FSA Savings Calculator

Estimate how much you can save with this FSA savings calculator! An FSA is an employer-sponsored benefit account that enables employees to set aside funds from each paycheck, before taxes, to help pay for out-of-pocket medical expenses for themselves and their dependents. This handy FSA Savings Calculator will help you estimate your health spending for … More >>

FSA HSA switching

Switching Between FSA and HSA

Although FSA accounts are compatible with any health plan, HSAs require simultaneous enrollment in an HSA-eligible, high-deductible health plan (HDHP). If your health coverage changes, you may change from an FSA in one plan year to an HSA in the next, or vice-versa. The IRS has specific rules that apply to this type of account … More >>

FSA vs. HRA vs. HSA: The Differences

When it comes to FSA vs. HRA vs. HSA, can you tell the differences? Each has a distinct purpose. Below is a quick overview and helpful infographic that compares specific features of each type of account.

Three consumer-directed healthcare (CDH) benefit accounts offer tax advantages. They include Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs).

While these accounts bear some similarities, they are not the same. Employers sponsor all of them, and they all offer tax advantages, help offset the cost of medical care, and help individuals take more control of their healthcare. However, beyond that, there are striking differences. 

FSA vs. HRA vs. HSA: The Overview

Flexible Spending Account (FSA)

Funding:  FSAs are owned by the employer. Participants contribute the funds, although employers may choose to contribute.

Contributions:  Participants reduce their tax liability by making pre-tax contributions. For 2024, the maximum annual election will be $3,200 for healthcare FSAs and $5,000 for DCAPs (Dependent Care Assistance Plans), often offered alongside healthcare FSAs.

Eligible Expenses:  Participants can use FSA funds to pay for a wide range of out-of-pocket medical expenses approved by the IRS. Eligible purchases include copays, deductibles, and coinsurance for medical care, prescriptions, eye exams, eyeglasses/contacts, dental care, first aid supplies, over-the-counter (OTC) medications, and more.

Unused Funds: There are three options to address unused funds at the plan year’s end. Each plan adopts one of the three as chosen by the employer.

  • ‘Use It or Lose It’ – Leftover funds are forfeited to the employer.
  • 2.5-Month Grace Period – Extra time is provided to spend the funds.
  • Carryover – Participants carry over a certain amount of unused funds to the next plan year; for 2024, the carryover limit will be $640.

Portability: FSAs are not portable. The employer owns the accounts, so participants cannot keep them if they change employers (voluntarily or involuntarily) or retire.

Other Important Facts: FSAs are “notional” accounts. That means participants must incur an eligible expense before administrators process a reimbursement. A significant advantage to the participant is that the funds do not need to accrue before use. The total annual election amount is available to spend immediately after the plan year starts.

Health Reimbursement Arrangement (HRA)

Funding:  HRAs are owned and funded by the employer only.

Contribution Limits:  There is no government-mandated limit on funding. The employer determines the amount each year. Since the employer is the sole contributor, there are no contribution tax breaks for the employee. However, employer contributions are not counted as income to the employee-participant.

Eligible Expenses: Employee participants can use their HRA to pay for qualified out-of-pocket medical expenses for themselves and their dependents. HRA-qualified expenses are determined by the employer and may vary from one company to the next. 

Rollover:  Unused funds may roll over from year to year, either in total or up to a certain amount, depending on the plan parameters.

Portability:  HRAs are not portable. An employee-participant loses access to the funds if he or she changes employers (whether voluntarily or involuntarily). Employers who offer retiree health insurance benefits may also offer an HRA for former employees enrolled in the retiree health plan.

Other Important Facts:  HRAs are “notional” accounts, meaning the participant must incur a qualified expense before funds are paid out. Self-employed persons are generally ineligible to have an HRA. However, if the self-employed person’s spouse is considered an employee of the business and receives a W-2 paycheck, then the spouse can have an HRA.

Health Savings Account (HSA)

Funding: HSAs are owned by the employee (although some employers also choose to contribute).

Contribution Limits: For 2024, the maximum annual election is $4,150 for employees with individual health coverage and $8,300 for those with family coverage. 

Eligible Expenses: Employee participants can use their HSA to pay for the same IRS-approved out-of-pocket medical expenses as FSAs. In addition, HSA owners can use their funds to pay premiums for COBRA, long-term care, and Medicare Parts A and B.

Plan Requirement: To be eligible to contribute to an HSA, the employee-participant must be enrolled in an HSA-qualified high-deductible health plan (HDHP).

Unused Funds: The account automatically renews at the plan year’s end, and any unused funds roll over to the next year.

Portability: HSA accounts, being individually owned, stay with the employee-participant for the life of the account, no matter their employment status.

Other Important Facts:

  • HSAs offer three tax advantages. Contributions are deducted from payroll before tax calculations. Withdrawals for qualified expenses are tax-free. Interest on the balance and any investment earnings are also tax-free.
  • Account owners may invest their HSA dollars once they meet the minimum balance threshold required by their plan provider.
  • Account owners over age 55 can make an extra “catch-up” contribution of up to $1,000 per year above the annual limit.
  • HSA owners under age 65 incur both income tax and non-qualified withdrawal penalties. However, when they turn 65, funds used or withdrawn for non-eligible expenses are only considered regular income for tax calculations.

FSA vs. HRA vs. HSA: The Infographic

More >>

2023 Limits Increase for FSA, Transit, Adoption

The IRS published Revenue Procedure 2022-38 on October 18, 2022, detailing 2023 limit increases for Flexible Spending Accounts (FSAs), Transit, and Adoption benefits. FSA Limit for 2023 The maximum annual contribution for Health FSAs is rising from $2,850 in 2022 to $3,050 in 2023. Dependent Care FSA limits remain $5,000 for married couples filing jointly … More >>

Back to School

FSA Help Pay for Back-to-School

Flexible Spending Account (FSA) holders with calendar-year plans have barely three months left in their plan year, and some are looking for ways to spend down their balances. Although we’re past the back-to-school period here in Arkansas, you can still use FSA dollars to cover certain school supplies. Some schools ask families to continuously replenish … More >>

allergies flu COVID

Is it Allergies, Flu or COVID?

From hayrides and warm apple cider to Halloween festivities and Thanksgiving homecomings, people look forward to Fall. But the return of cooler temperatures also brings an increase in hay fever and a rise in cold and flu rates – and there could be another COVID wave. When you sneeze or cough, how do you know … More >>

3 Ways to an Easier Enrollment

Is your company getting ready for open enrollment? It can be a stressful time for HR and employees alike. An estimated 45% of workers say they are apprehensive about the open enrollment process. Here are three ways to help ease the stress of enrollment season. #1: Take Active Steps to Fend Off Stress and Burnout HR … More >>

travel

Using Your Benefits to Ease Travel Stress

This summer has been hard on travelers, from high gasoline prices to numerous canceled flights. Whether traveling for business or pleasure, no one has been immune from it. Here are eight ways you can use your benefit accounts to help ease travel stress. 1. Stock Up on Medications Use your FSA or HSA account to … More >>

surprise

Surprising FSA-Eligible Expenses

Healthcare flexible spending accounts (FSAs) let you use pre-tax funds to pay for some medical, dental, and health-related products and services, including certain over-the-counter items. Most people know FSA eligible expenses include doctor visits, surgery and other medical procedures, prescription medicines, dental, vision, chiropractic, and mental health services. However, there are some eligible expenses that … More >>