10 Oct Use Pre-Tax Money for Medical Expenses
Did you know that there’s a way you can pay for your medical expenses with pre-tax money? If you have a health savings account (HSA) or a flexible spending account (FSA), you could save up to 30 cents to the dollar on medical expenses (including the services at LT Men’s Clinic) because your contributions to these accounts are tax free.
Both of these options are a great way to pay your medical bills, but which one is right for you? While they both use pre-tax money, there are some pretty big distinctions between the two. Examining the differences can help you figure out which one works best with your lifestyle, so let’s take a look.
The first question to ask is whether or not you’re actually eligible for either of these accounts. Since an FSA is offered through your employer, you can only sign up for one if your employer offers it as part of your benefits. An HSA, on the other hand, is available to employees who are enrolled in a high-deductible health insurance plan. The IRS sets the parameters of what qualifies as a high-deductible plan, and for 2015 and 2016, the deductible for an individual needs to be at least $1,300 while the deductible for a family needs to be at least $2,600.
Who Owns the Account?
An FSA is owned by your employer, so when you leave the company, you don’t take your FSA with you unless you’re eligible for continuation through COBRA (which temporarily extends your health care coverage). An HSA is owned by you, so you can take it from company to company and even into your retirement.
What about Contributions?
There are a few factors to consider when talking about contributions.
First, let’s talk about the limit. An HSA has a higher contribution limit than an FSA (in 2015, for example, the contribution limits for individuals and families were $3,350 and $6,650, respectively, while the limit for an FSA was $2,550).
Another factor to consider is what happens to the contributions over time. With an FSA, you’ll lose any money that you don’t use at the end of the year. Some employers set up a grace period that extends the deadline for using your funds, but that depends on your employer. The general rule is that if you don’t use it, you lose it. Because of this, you’ll need to feel pretty comfortable estimating your medical expenses for the year (and there are lots of calculators and resources out there to help you figure that out). An HSA is different in that the funds rollover, and you can use the funds even into retirement.
Third, let’s discuss your access to your contributions. With an FSA, you’ll have access to all of your FSA election amount at any time during the year, meaning that you can withdraw money from the account before you’ve actually put that money into the account. With an HSA, you only have access to the funds that you’ve actually deposited into the account.
Finally, are you able to change your contribution limit? With an FSA, you can only change your contribution amount if your have a change in circumstances that qualifies you for a change. An HSA is much more flexible—you can change your contributions month to month, if you’d like.
Overall, if you’re able to use one of these accounts, it could mean more money for you, and who doesn’t love that? Again, you can use either of these accounts to pay for services at LT Men’s Clinic, including all forms of testosterone therapy, copays, and labs that are done in the office. Coverage will vary depending on your provider, so be sure to check with your insurance for details and specifics.