New survey data shows consumers would contribute more to flexible spending accounts (FSAs) and health savings accounts (HSAs) if they understood eligibility and deadline rules
NEW YORK, Aug. 22, 2022 /PRNewswire-PRWeb/ -- In the coming weeks, individuals and families across the country will begin making decisions about employer-sponsored benefits that will impact their health and financial wellbeing in 2023 and beyond. Flexible spending accounts (FSAs) and health savings accounts (HSAs) are among the most common – yet most misunderstood – of the plan options that are offered every year during the annual benefits open enrollment period. That's why Health-E Commerce, parent brand to FSAstore.com and HSAstore.com, has released expert tips to help consumers understand their account options and make the best choice for their needs.
"We're on a mission to simplify health spending and savings accounts, and that starts with educating consumers about the value of tax-advantaged accounts and how they can be used to manage everyday health and wellbeing for people of all ages and lifestyles," said Rachel Rouleau, chief compliance officer for Health-E Commerce. "With inflation on the rise and healthcare costs increasing, individuals and families need all the help they can get to protect their hard-earned dollars and to manage their health. These tips from our FSA and HSA experts can help them do just that."
According to a recent survey of people who shop FSAstore.com and HSAstore.com, if they understood what's eligible, they would be more likely to enroll in an FSA or HSA (98%) and would be more likely to increase their contributions (85%). Case in point, account holders who shop FSAstore.com and benefit from the educational resources offered on the site contribute on average $600 more to their FSA than the industry average.
According to the experts at Health-E Commerce, here's what consumers need to understand about FSAs and HSAs during open enrollment this year:
FSAs and HSAs reduce taxable income and help consumers save. FSAs and HSAs are tax-advantaged healthcare accounts that allow employees to set aside pre-tax dollars to pay for everyday and unexpected health expenses. HSAs can be offered through an employer, but are opened and owned by the individual and require enrollment in a qualified high-deductible health plan. Meanwhile, FSAs are employer-sponsored accounts that are owned and managed by the employer to which employees contribute pre-tax payroll dollars. Funds in an HSA rollover from year to year and always belong to the employee (even in retirement), while FSA funds expire each year (often on December 31). An employer may allow employees to rollover up to $570 in their FSA in 2022 or provide for an extension (such as a grace period) by which to use FSA funds, but neither option is required.
Tax-free funds can be used for a wide variety of health expenses. Health-E Commerce offers the industry's most comprehensive eligibility list, with thousands of eligible products and services – all searchable by health condition, product category, and brand name.
Contribution limits have increased for 2023. Both FSA and HSA contributions are made with pre-tax income, which means account holders can reduce their taxable income by the amount of their contribution. While the IRS hasn't yet announced the 2023 FSA limit (this typically is announced in October or November), the 2022 limit of $2,850 is expected to increase. HSA contribution limits, on the other hand, have been announced and have increased to $3,850 for individual enrollment in a qualified HDHP and $7,750 for families. In addition to reducing taxable income, by using tax-free FSA and HSA funds on healthcare needs, individuals can save an estimated 30% on eligible expenses (based on individual federal and state tax brackets). Use an FSA and HSA calculator to plan for future expenses based on personal and family health needs, estimate how much to contribute, and project potential tax savings.
FSA deadline and rollover extensions expire in 2022. Deadline extensions provided by federal legislation that was passed during the COVID-19 pandemic gave employers the flexibility to extend deadlines and rollover limits. Those extensions expire at the end of 2022. Ask your employer or benefits manager about the following:
- What is our FSA spending deadline? For many FSAs, the spending deadline is December 31.
- Do we have an FSA grace period? March 15, 2023, may be the last chance for anyone with a December 31, 2022 spending deadline to spend remaining FSA funds.
- Do we have an FSA carryover? Employers were allowed to temporarily increase the FSA carryover for the past two years. For 2022, carryover limits are back in place, which means that at a maximum, employees may have a carryover allowing up to $570 to roll into next year and anything over that amount will be lost.
- Where can I track my FSA balance? The optional FSA deadline and rollover extensions coupled with the disruption to healthcare access has left many account holders with more FSA funds remaining in their accounts than normal. Current estimates indicate that FSA holders forfeit over $1 billion dollars in unused funds to a missed deadline every year, and even more may be lost in 2022 if account holders do not check their remaining balance and understand their deadline. Ask your employer how to track your deadline and balance, and consider signing up for FSA deadline alerts through FSAstore.com.
HSAstore.com and FSAstore.com are the first and leading online marketplaces that exclusively sell FSA- and HSA-eligible products. To learn more about how tax-advantaged healthcare accounts work, visit the FSA or HSA Learning Centers.
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About Health-E Commerce
Health-E Commerce is the parent brand to FSA Store, HSA Store and WellDeservedHealth, a family of online marketplaces that serve the 70+ million consumers enrolled in pre-tax health and wellness accounts. The company also created Caring Mill, a popular private-label line of health products that benefits Children's Health Fund and enables customers to make a donation with each purchase. Since 2010, the Health-E Commerce brands have led the direct-to-consumer e-commerce market for exclusively pre-tax health and wellness benefits. Health-E Commerce plays an essential role in expanding product eligibility for important new categories within the list of eligible medical expenses.
Media Contact
Barbara Tabor, Health-E Commerce, 651-230-9192, [email protected]
SOURCE Health-E Commerce
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