Category:
Flexible Spending Accounts (FSA)

WEX Health 5 Back-to-School Expenses You Can Cover with Your HSA, HRA or FSA

5 Back-to-School Expenses You Can Cover with Your HSA, HRA or FSA

08/29/2018

 

What do reading, writing and arithmetic have to do with your consumer-directed health (CDH) account? You may not know that you can use the funds you’ve been squirreling away in your health savings account (HSA), health reimbursement arrangement (HRA) or flexible spending account (FSA) to cover some of the back-to-school expenses that hit all at once this time of year. To mitigate those costs, here are five things you can use your CDH account to pay for now:

 

  1. Vaccinations: Need to get up to date on immunizations before school starts? They’re eligible for reimbursement with an FSA, HSA or HRA. And when flu season follows, don’t forget you can also use your CDH account for your annual flu shot. The Centers for Disease Control and Prevention recommends that anyone over the age of 6 months should get a flu vaccination each year to build up an immunity to the virus prior to flu season.

 

  1. School and sports physical exams: You can take care of this standard checkup with the funds you’ve saved into your FSA, HSA or HRA. For children heading back to school or onto a sports field, these annual exams are necessary to assess their physical well-being, build their medical history and gather the necessary paperwork to ensure that they’re up to date on state-required vaccines.

 

  1. Eye exams and corrective eyewear: Speaking of physicals, your child’s physician will likely check their eyesight during their physical. But should he or she need the services of an optometrist or ophthalmologist, you can also turn to your CDH account to cover the cost of both the eye exam and any corrective eyewear, including prescription glasses and contacts.

 

  1. Certain medical and orthopedic supplies: With back-to-school germs and boo-boos (acquired both on playgrounds and sports fields) on the horizon, you’ll be happy to know that you can use your FSA, HSA or HRA to stock up ahead of time on things like bandages, children’s pain relievers, first-aid kits, lice treatments and thermometers. Likewise, certain orthopedic supplies for student athletes are also eligible for reimbursement, including ankle, knee and back braces/wraps, athletic tape and arch supports.

 

  1. Acne treatments: The most common skin condition in the U.S., acne is extremely prevalent in pre-teens and teenagers especially. Eighty-five percent of people ages 12 to 24 experience at least mild acne. Acne is considered a disease, so the cost of treating it, whether with OTC meds, topical prescriptions, antibiotics or other medicines, qualifies as an eligible expense for CDH account holders.

 

With the number of active high-deductible healthcare plans (HDHPs) on the rise, CDH accounts are also becoming far more common, as consumers look for ways to take more financial responsibility for their healthcare expenses. This makes it more important than ever to educate consumers about their HSA, HRA or FSA and what expenses can be covered by these accounts.

 

Have questions about health savings accounts? We have answers to the most common questions about these tax-advantaged savings vehicles.

What Employees Need to Know About Open Enrollment and Their HSA and FSA Dollars at Year’s End

What Employees Need to Know About Open Enrollment and Their HSA and FSA Dollars at Year’s End

12/4/2017

 

If you’re an employer or benefits administrator, it’s likely that you’ve received your fair share of questions from employees this fall about coverage adjustments during open enrollment. Some of those employees who already have tax-advantaged health savings and flexible spending accounts are also probably asking for clarification on what to do with the sums in these accounts at the end of 2017 and whether or not to continue with their plans.

 

Now is the ideal time to help employees understand how these universally underutilized accounts work and what makes them so valuable. It’s particularly important to educate employees about their flexible spending and health savings accounts in their first year (or during the first year that a company has made an HSA or FSA available) and during the first two open enrollment seasons. Here are the key messages that every employee needs to hear about HSAs, FSAs and open enrollment at the end of the year:

 

All HSA dollars roll over at the end of the year; most FSA dollars won’t

 

While there are many similarities between HSAs and FSAs, some of their most important distinctions arise at the end of the year. Most important, HSA balances can—and ideally will—stay and continue to grow, rolling over into the next year. On the other hand, FSA balances are largely “use it or lose it” by year’s end. Since 2013, however, the IRS has permitted FSA accountholders to carry over $500 annually for expenses in the next year. (Prior to 2013, any unspent funds reverted to the employer’s coffers at year’s end.) Employers can now either allow employees to carry over the $500 to the next year or to spend the remaining funds during a grace period that lasts until March 15 of the following year.

 

Further, employees can change how much they contribute to their HSA at any point during the year, but can only adjust their contribution amounts to FSAs during open enrollment or with a change in employment or family status. The bottom line: HSAs are for saving money for healthcare expenses, and FSAs are for spending it. HSAs are only for employees with high-deductible healthcare plans, while employers can make FSAs available to any employee.

 

Opt for an HSA during open enrollment to save for long-term healthcare expenses

 

HSAs are widely misunderstood. Many people think that these accounts are designed primarily to pay for out-of-pocket medical expenses in the near future (as is the case with FSAs). But the long-term savings value of HSAs is what makes them the most valuable, and during open enrollment, they should be presented to eligible employees as an important part of saving for future medical expenses and retirement.

 

According to a new report from the Employee Benefit Research Institute (EBRI), two-thirds of account holders ended 2016 with positive net contributions, and over 90 percent of HSAs with individual or employer contributions in 2016 ended the year with funds to roll over for future expenses. EBRI’s report also found that the average HSA balance among account holders with individual or employer contributions at the end of 2016 was $2,532, up from $1,604 at the beginning of the year.

 

In 2018, contributions to HSAs will be capped at $3,450 for individuals or $6,900 for families, up from $6,750 in 2017.

 

Opt for an FSA during open enrollment to cover short-term health expenses

 

A flexible spending arrangement, which employers offer to employees at their discretion, can help cover expenses not covered by an employee’s health plan, including deductibles, copayments and prescription costs.

 

In 2018, contributions to FSAs will be capped at $2,650, $50 more than the limit for 2017.

 

More important end-of-year HSA tax information

 

Not all HSA contributions have to be made by Dec. 31 for an employee to claim a tax deduction. Employees and employers can make contributions to an HSA up until April 16, 2018, for 2017.

 

Further, as long as an employee was eligible to contribute to an HSA as of Dec. 1, they are considered to be eligible for the whole year and can still make a maximum contribution for the full year. However, they must remain eligible for an HSA through Dec. 31, 2018. If they don’t, they will have to include the amount over-contributed in income and pay taxes and a 10 percent penalty on it.

 

How should employers communicate the value of FSAs and HSAs to employees? Find tips and ideas in our two part series here and here.

IRS Makes Cost-of-Living Adjustments for HRAs and FSAs

IRS Makes Cost-of-Living Adjustments for HRAs and FSAs

10/26/2017

 

The IRS has announced tax year 2018 cost-of-living adjustments for inflation for more than 50 tax provisions, including increasingly contribution limits slightly for Qualified Small Employer HRAs and FSAs. HSA limits had been announced by the IRS back on May 4, 2017, as part of the  Revenue Procedure 2017-37, which included inflation-adjusted HSA contribution limits effective, along with minimum deductible and maximum out-of-pocket expenses for the high-deductible health plans (HDHPs) that HSAs must be coupled with. Continue reading

Is It Time for a Quick HSA/FSA Checkup?

Is It Time for a Quick HSA/FSA Checkup?

This is a good time for organizations and employees to do a little fall cleaning and run through a healthcare checklist to make sure they are aware of the most current HSA/FSA benefit information. Continue reading

Communicate the Value of FSAs and HSAs – Part II: Health Savings Accounts

Communicate the Value of FSAs and HSAs – Part II: Health Savings Accounts

In our most recent post, Communicating the Benefits of FSAs and HSAs Part I, we explored the benefits of flexible spending arrangements and how to help your employees to understand the value. Today, however, we would like to turn our attention to a topic that has been recently politicized, but misunderstood, Health Savings Accounts.

According to the 2016 SHRM Employee Benefits Survey, the percentage of organizations offering HSAs increased from 43 percent to 50 percent in the past year. Continue reading

Communicate the Value of FSAs and HSAs – Part I: Flexible Spending Accounts

Communicate the Value of FSAs and HSAs – Part I: Flexible Spending Accounts

Help employees navigate flexible spending accounts (FSAs) and health savings accounts (HSAs) to their advantage. Employees may just need a little reeducation about the cost-savings and value that these types of plans can provide them. Prior to open enrollment, is a great time to remind your workforce of the many reasons why to enroll and use a FSA or HSA. Continue reading

Healthcare Benefits in 2017: What Employers Have to Say

It’s been a tumultuous few years for the healthcare benefits community, and as the Trump administration takes office, the changes are just beginning. To address this, the Healthcare Trends Institute recently completed a survey of benefits professionals from across the United States to learn more about the trends, preparations and expectations for the coming year.

Trends in Healthcare Benefits: 2017 Healthcare Benefits Benchmark Study

The 2017 Healthcare Benefits Benchmark Study was completed by over 250 human resources executives, benefit specialists and other benefit decision makers from organizations ranging in employee size from less than 50 to over 2,500. Below, we will share some of the key insights and what they mean for employer groups in 2017.

Among the notable considerations for employers heading into 2017:

Employers Buying into Healthcare Consumerism

Since the passing of the Affordable Care Act in 2010, employers have been encouraging their employees to take more control of their own healthcare decisions by offering a high-deductible health plan (HDHP).

The Move to HDHP

High deductible health plans are plans that have minimum deductibles of $1,300 for individuals and $2,600 for families. One of the main selling points of an HDHP is that it combats rapid increases to monthly premiums for employers and employees, as shown by the relatively flat Medical Cost Trend over the past 4 years. The increasing popularity of these plans grew as a result of rising healthcare costs and the passing of the ACA, and pose benefits for both employers and employees:

  • For employees, high deductible health plans were designed to help them to lower premiums, focus on preventive care, shop around for affordable care, use emergency rooms only for emergencies, and ultimately take more control of their healthcare decisions.
  • For employers, HDHPs helped to combat rising premiums while shielding them from the Cadillac Tax, which was initially set to begin in 2018.

With all of this in mind, 2016 marked a milestone for healthcare consumerism, with the amount of organizations offering HDHPs jumping from 28% four years ago to 39% in last year’s survey to 53% in this year’s survey.

Pairing HDHP with Consumer-Oriented Accounts (HSA, HRA, FSA)

With this rise in HDHPs came an increase in the number of employees being enrolled in a Health Savings Account, Healthcare Reimbursement Arrangement, or Flexible Spending Account, as this year’s survey found that 51.5% of respondents’ employees are enrolled in one or more of these plans/arrangements.

By offering one or more of these arrangements, employers are demonstrating that they are committed to helping employees afford out-of-pocket healthcare expenses if and when they arise, making people-first decisions rather than money-first ones.

Notably, however, the move to HDHP does require effective communication, as there is a great deal of misunderstanding among consumers about why these plans help them and how they can use them effectively. Learn more about common misunderstandings in 5 Benefits Problems Employees Face and how to address concerns in How to Talk About Healthcare Consumerism with Your Employees.

Focusing on the Advantages

Organizations are relying heavily on their benefits programs to recruit, retain, and engage employees. Even if many employers have moved away from the traditional forms of healthcare benefits that were prevalent in the industry decades ago, the benefits offerings of today still can represent a significant investment in happier, healthier, and more engaged employees. Additionally, a well-defined benefits strategy can play a major role in improving company reputation as a leader and one that cares about its employees. In BenefitsPro’s Analysis of our whitepaper:

Respondents were asked to rank on a scale of 1 to 10 how strongly they agree with the statement “the quality of a benefits package impacts the reputation of my company,” with 10 being “strongly agree.” Not surprisingly, given that such packages are looked upon as recruiting tools, 67 percent put the statement at 7 or higher, with nearly a quarter choosing “strongly agree.”

Learn More: Download the Entire 2017 Healthcare Benefits Trends Benchmark Study

The entire 2017 Healthcare Benefits Trends whitepaper takes a much deeper look into the trends to look out for in 2017, including plans and insights from other employer groups. The national survey went to over 250 human resources executives, benefit specialists and other benefit decision makers from organizations ranging in employee size from less than 50 to over 2,500. Click Here to Download.