Have you recently changed employers? Are you considering making a change? Fortunately, when you participate in a health savings account (HSA) through Advantage Administrators, your HSA stays with you. There are plenty of myths about HSAs, but today let’s tackle what really happens to your HSA when you change employers. HSA transfer If your new employer offers an...
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Health savings account (HSA) contribution limits will increase considerably in 2023. The IRS announced that 2023 HSA contribution limits will rise to $3,850 for self-only HSAs and to $7,750 for family HSAs. Those are increases of $200 and $450, respectively, from 2022. The 2023 HSA limit increases are in response to our country’s recent spike in...
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Participating in a health savings account (HSA) or flexible spending account (FSA) is a great way to save money. Below, we’ve outlined the key differences between an HSA and an FSA so you can see how they work, the advantages of each and why you should participate in them. Health savings account An HSA is...
There are a lot of options for what to spend your FSA and HSA funds on – but spending these funds on non-eligible expenses can have negative consequences. We’ve compiled a list of eligible and non-eligible expenses to take the guesswork out of it. View it at the link below. https://bit.ly/3lYkj2i
Did you know that benefits play a huge role in employee satisfaction? Not only will top-of-the-line benefits retain employees, but it’ll also encourage high-level talent to apply for positions at your company! If you’re wondering how you can incorporate the best plan for your company, contact us and we’ll help you out.
Since flexible spending accounts (FSAs) are governed by the IRS’ use-it-or-lose-it rule, any unused funds that remain in your account at the end of the year may be forfeited — with some exceptions, like if your FSA includes a carryover or grace period. It’s estimated that $1 billion of unused medical FSA funds will be...
Participating in a health savings account (HSA) or flexible spending account (FSA) is a great way to save money. Below, we’ve outlined the key differences between an HSA and an FSA so you can see how they work, the advantages of each and why you should participate in them.
Health savings account
An HSA is an individually owned benefits plan funded by you or your employer that lets you save on purchases of eligible expenses. You must be enrolled in a high-deductible health plan (HDHP) to be eligible, which lowers your insurance premiums.
HSAs have a triple tax advantage, meaning distributions for qualified medical expenses and investment returns are tax-free and contributions are tax-deductible. HSA funds can be invested for potential growth.
Our HSA comes with a low investment threshold, and our online account and mobile app make it easy for you to make the most out of your funds.
Flexible spending account
An FSA is an employer-owned account that you use to set aside funds for qualified expenses. You can enroll in an FSA during open enrollment, when you’re hired or when you experience a status change, such as marriage or birth/adoption of a child. We offer four common types of FSAs:
Medical FSA
Limited Medical FSA
Combination FSA
Dependent Care FSA
You can save on eligible expenses with an FSA. For example, if one employee is enrolled in a medical FSA, he or she reduces the taxable income, which reduces the amount subject to Social Security and Medicare. You won’t need to pay Social Security or Medicare taxes on the funds going into the FSA.
Key differences between HSAs and FSAs
Ownership: You own your HSA. Your employer owns your FSA.
Contribution Limits: The amount varies for each, as determined by the IRS. The 2022 HSA limits are $3,650 for self-only and $7,300 for family. The 2022 FSA limits are $2,850 for medical, limited and combination FSAs. For dependent care FSAs, the limit is $5,000.
Health Plan Eligibility: HSA participants must be enrolled in HDHPs. FSA participants need to simply be offered a group health plan by their employer.
Carryover: All HSA funds carry over from year to year. Employers can only allow up to a $570 carryover of medical FSA funds, while dependent care FSA funds do not carry over.
Investment Capability: You can invest in HSA funds, but not FSA funds.
Can I have both an FSA and an HSA?
Yes, but there are restrictions. If you participate in an HSA, you can also participate in a limited medical FSA, a combination FSA or a dependent care FSA. You can’t participate in an HSA and a general-purpose medical FSA. There are perks to participating in both accounts.
Is an HSA or FSA use-it-or-lose-it?
The IRS’ use-or-lose rule states that FSA funds must be spent by the participant within the FSA’s plan year. That means FSA participants typically need to spend most or all their FSA funds by the end of the plan year. Unused funds at the end of the plan year are forfeited to the plan.
The use-or-lose rule doesn’t apply to HSAs. All HSA funds carry over from year to year.
Watch the below video from Wex’s Benefits Buzz podcast to hear from Rida Wong of Health-E Commerce about the primary differences between an HSA and an FSA.
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The information in this blog post is for educational purposes only. It is not investment, legal or tax advice. For legal or tax advice, you should consult your own counsel.