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You may be shocked by how broad FSA eligibility is, so now is the time to use up any leftover funds from the previous year if you have a flexible spending account or FSA. Everything from reading glasses to pimple patches is included.
The most crucial guideline you should keep in mind regarding FSAs is “use it or lose it.” Funds in a flexible spending account (FSA) often expire at midnight on December 31. However, if your company allows it, you may be able to carry over up to two months and fifteen days of FSA funds into the next year; in this case, you would have until March 15 at midnight to use the leftover funds. Another possibility is that your company will only let you roll over $550 into the next year. Your employer may only provide one of these choices, so be sure to verify the policy.
If you’ve ever shopped online, you may have seen the designation “FSA- and HSA-eligible” on an item, but a flexible spending account (FSA) and a health savings account (HSA) are not the same things. Here’s some information regarding FSAs, HSAs, and the kinds of expenses each can help pay for to clear up any confusion you may have about using them.
Difference between FSA and HSA
The money in a health savings account (HSA) doesn’t expire as in FSA. That, however, is not the only dissimilarity between the two.
In this context, FSA refers to a flexible spending account. In some cases, both may be available to you as part of your employer-provided health insurance. A health savings account (HSA) is a type of savings account that can be used to save for future medical expenses. According to the IRS, neither you nor your employer has to pay taxes on the money you put in (though your company may opt to do so).
In the eyes of the Internal Revenue Service, a health savings account (HSA) is a “tax-exempt trust” that is administered by a “trustee” such as a bank or insurance company and from which you can withdraw funds to cover medical expenses such as deductibles and copayments. Funds deposited into a health savings account (HSA) are exempt from federal income tax. A number of variables, including the type of coverage you have and even your age, determine the maximum amount you may put into a health savings account. Unlike an FSA, which allows you to save for any medical expenses, an HSA requires that you have a high deductible health insurance plan, which often only pays for preventive care until your deductible is met.
Where to buy things with your HSA or FSA
Amazon, Target, Walmart, and CVS are just a few of the many online merchants that have FSA Stores where you can buy things with your health savings account or flexible spending account. One expert suggested that the FSA Store itself would be the ideal option since you can use your FSA or HSA card to pay for nearly everything on the site.
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