HSA Investing for Tax-Free Garden Growth

Did you know that HSA owners enjoy tax-free interest on balances and tax-free returns from HSA investing? Health Savings Accounts (HSAs) are tax-advantaged savings accounts that help people with a high deductible health plan pay for out-of-pocket medical expenses. Since their inception in 2004, HSAs have become very popular. Devenir’s 2022 midyear report finds almost $99 billion … More >>

Men

Movember and Men’s Healthcare

Each November, men across the globe grow mustaches to spotlight issues within men’s healthcare. Let’s talk about some of the most common issues and how consumer-directed healthcare accounts can help cover related expenses. Men’s Healthcare: Cancer Screenings After non-melanoma skin cancer, the CDC reports, prostate cancer is the most frequent type that men experience. Although … 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 2023, the maximum annual election will be $3,050 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 2023, the carryover limit will be $610.

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 2023, the maximum annual election is $3,850 for employees with individual health coverage and $7,750 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

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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 >>

Inflation Reduction Act May Impact Group Health Plans

President Biden signed the Inflation Reduction Act (IRA) into law on August 16, 2022. Among other provisions, the IRA: Addresses aspects of the Affordable Care Act (ACA) Requires Medicare to negotiate drug prices with manufacturers Caps the cost of prescribed insulin for Medicare recipients at $35 a month Provides an insulin safe harbor for high-deductible … 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 >>

contribution limits

IRS Announces 2023 HSA Limits

The Internal Revenue Service (IRS) published the 2023 annual contribution limits for Health Savings Accounts (HSAs) on April 29. They also announced high deductible health plan (HDHP) minimum deductibles and out-of-pocket maximums for next year. 2023 HSA Contribution Limits For 2023, HSA owners will see a significant increase in the amount they can contribute to their accounts. … More >>

debit cards

Debit Cards are a Benefits Must Have

During the pandemic, the use of debit and credit cards has soared. A 2021 MarketWatch analysis found that debit card transaction volumes continue to surge, while growth in credit transactions has remained essentially flat. Always a possible addition to tax-advantaged benefit accounts, debit cards have increasingly become a benefits “must have.” Employees Save Time Offering … More >>

Some Nutritional Needs Qualify as FSA/HSA-Eligible Expenses

No, you can’t use your Flexible Spending Account (FSA) or Health Savings Account (HSA) for straight food purchases like meat, produce and dairy. But you can use them for some nutrition-related products and services. To review, tax-advantaged accounts have regulatory restrictions on eligible products and services. The products and services must have a medical purpose, … More >>

woman preventive care

Reducing Out-of-Pocket Expenses for Women and Children’s Preventive Care

New preventive care and screening guidelines aimed at reducing out-of-pocket expenses for women, infants, children, and adolescents were recently announced by the Health Resources and Services Administration (HRSA) of the U.S. Dept. of Health and Human Services (HHS) The new guidelines take effect for plans starting in 2023. Under the Affordable Care Act (ACA), certain group … More >>

New Year, New You with Employee Wellness Programs

As we welcome a new year, many of us are focused on how we can better ourselves and are making new resolutions. Some are emphasizing physical health, vowing to eat better and exercise more. Others are targeting their financial health, making an effort to spend less and save more. Some are centered on taking care … More >>

no suprises act

No Surprises Act and Medical Bills

Did you know more than a third of employees say the medical bills they receive after seeking care are “always or usually” a surprise? But 28% pay them anyway because they don’t want to have to deal with the insurance company. Insurance plans cover some of the cost of medical care. What’s left over falls … More >>

boost retirement funds HSA

Boost Retirement Funds With Your HSA

Pandemic-related losses have business owners looking for ways to cut costs. High Deductible Health Plans (HDHPs) help employers provide healthcare options while minimizing expenses. Due to the higher deductibles and out-of-pocket costs, employers often pair a qualified HDHP with Health Savings Accounts (HSAs). In addition to helping employees meet healthcare expenses, HSAs can help them … More >>

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How Can Employers Attract and Retain Top Talent

When the pandemic hit, workers were being furloughed or laid off in droves as forced shutdowns shrank, if not entirely closed, many businesses. With states having reopened and companies attempting to hire people back, another phenomenon has taken shape: Workers are refusing to go back to previous jobs or quitting the jobs they do have … More >>

flu shots pandemic

Flu Shots and the Pandemic

Flu season can be miserable for everyone. Parents have to deal with sick kids at home. Employers have to deal with employees taking sick time. Doctors offices are hard to get into for an appointment. Add in people dealing with the coronavirus pandemic. It seems more important than ever to get, and stay, educated on … More >>

Mental Health Care and Your Benefits Accounts

With one in five U.S. adults experiencing some form of mental illness in any given year, the need for mental health care impacts many families. Yet, according to the National Alliance of Mental Illness (NAMI), 55 percent of adults and 49 percent of children ages 6-17 with a mental illness don’t receive mental health care services. … More >>

HSA Growth: Now’s the Time to Invest

Opening a Health Savings Account (HSA) can be a great investment in your personal healthcare and financial future. Owned by the participant-employee (rather than the employer), the HSA is a versatile spending and savings account that can be used for many healthcare expenses. Since they can keep the account for life, HSA owners should adopt … More >>

Captain Contributor Explains Eligible Expenses

” Good news! Your FSA or HSA account now has even more spending power! The CARES Act of 2020 expanded the use of Health Savings Accounts and Flexible Spending Accounts accounts to include more eligible healthcare items. Watch this video to learn more about eligible healthcare expenses! Captain Contributor – Benefits Super Hero Captain Contributor Explains ICHRAs … More >>

2022 HSA Contribution Limits and More Announced by IRS

The Internal Revenue Service (IRS) published the 2022 annual contribution limits for Health Savings Accounts (HSAs) on Monday, May 10. The announcement also featured the high deductible health plan minimum deductibles and out-of-pocket maximum amounts for next year. Learn more about 2022 HSA contribution limits. 2022 HSA Contribution Limits In 2022, HSA owners will see … More >>

Captain Contributor Explains COBRA Insurance

” Sometimes things happen that can cause you to lose healthcare coverage provided by an employer’s group health plan. Luckily, COBRA is an emergency option that keeps people from losing their health insurance until they can find other coverage. Watch this video to learn more about COBRA Insurance! Captain Contributor – Benefits Super Hero Captain Contributor Explains … More >>

HSA Contributions – Approaching the Tax Deadline

The 2021 tax deadline has been moved from April 15 to May 17 by the IRS. Health Savings Account (HSA) owners are usually keenly aware of the account’s triple tax advantage: pre-tax contributions, tax-free withdrawals for eligible expenses, and tax-free growth. What you may not know is that you can take advantage of tax-free contributions … More >>

COVID-19 PPE Is Now An Eligible Healthcare Expense

The fight against COVID-19 has expanded to the purchase of personal protective equipment (PPE) items. On Friday, March 26, the IRS released Announcement 2021-7, which qualifies PPE purchased for the primary purpose of preventing the spread of COVID-19 as medical expenses under section 213(d) of the Internal Revenue Code. The regulation allows specific items to be … More >>

HSA Investments Overview – Vermont

Home HSA Investments HSAToday account owners whose account balances are above a particular threshold are eligible to invest in mutual funds. This document details the funds that are currently available for investment through HSAToday. Periodically, there may be changes to available funds based on the expertise and discretion of our investment advisor. The balance threshold … More >>

Captain Contributor Explains the Uniform Coverage Rule

” You probably already know that by using a Flexible Spending Account (FSA) you can get significant tax savings, but did you know that with a health or limited purpose FSA, you do not have to wait for that money to build up before it’s available?  Watch this video to learn more about the uniform … More >>

Captain Contributor Explains HSA Funding

” A Health Savings Plan (HSA) is a great compliment to a High Deductible Health Plan (HDHP). But HSA funding can be confusing. How do you build up your HSA account balance while using it for healthcare expenses at the same time? Watch this video to learn more about funding your HSA! Captain Contributor – Benefits Super Hero … More >>