Now that we’re more than halfway through the year, this is a great time to take stock of your Health Savings Account (HSA) or Flexible Spending Account (FSA). While there are administrative differences in these types of accounts, both allow you to save and use pre-tax dollars toward healthcare-related expenses for you and your family without being taxed.
For example, while the funds in an HSA can roll over and accumulate year to year, you may be limited in how much of your FSA you can roll over to the next year, so now is the time to determine if you are maximizing this money so nothing is left on the table come 2022. Here are a few other questions to ask yourself:
- Do you have enough to get you through the rest of the year?
- Can you add more to an HSA for future healthcare needs?
- What upcoming treatments, visits or procedures do you have coming up the rest of the year?
- For an FSA, is there more than is needed for the rest of the year?
Keep in mind you can use these accounts to cover prescriptions, provider visit copays, and other expenses related to your healthcare. Also, tracking how your spending is going to can help you determine how much to contribute moving forward as well, which you’ll likely do soon as part of open enrollment.
Both FSAs and HSAs can be used help pay for a wide variety of health-related expenses for you and your dependents, saving you money by putting these funds aside tax-free. You have flexibility to use these funds as needed for healthcare and can shop around in your area for the best value on eligible expenses. Additionally, your employer may also contribute funds to your these accounts, providing “free money” that you can use as needed for healthcare expenses. Eligible expenses include, but are not limited to:
- Breast pumps and supplies
- Contact lenses and eyeglasses
- Hearing aids
- Laboratory fees
- Long-term care
- Psychiatric care
For a full list of eligible expenses, visit the IRS website here. It’s also important to keep in mind which expenses may not be eligible, including childcare for a healthy baby, cosmetic surgery, health club dues, maternity clothes, and nonprescription medications, among other items. If you have any specific questions about what is considered eligible, be sure to consult your HSA or FSA administrator or a tax expert to avoid paying a penalty on non-qualified expenses.
These accounts offer many financial and health benefits that can help you save money if used appropriately. Make sure you review your accounts regularly to see where you stand and ensure you’re not leaving any money behind.