Tax Advantaged Savings Accounts

Breaking Down Tax Advantaged Savings Accounts

Why Tax Advantaged Benet Accounts?

Medical, dental, vision and dependent care expenses can add up!

This is why the IRS allows individuals to contribute funds to Health Savings Accounts and Flexible Spending Accounts PRE-TAX to help pay for these expenses.

There are rules set forth by the IRS that guide when an employer can offer these accounts and how much employees can contribute. Learn more ahead!

Health Savings Account HSA

Must be enrolled in a Qualied High Deducible Health Plan to be eligible

Health Savings Accounts are with a banking institution; sometimes your employer chooses the bank and sometimes you choose the bank.

Must use the funds on qualied medical expenses for you and your tax dependents only

There are eligibility requirements and circumstances that could make you ineligible.

There are annual maximum contribution limits based on who you cover on your plan and your age.

You are responsible for using the funds appropriately and for saving your receipts.

Benets of an HSA beyond Pre-Tax Savings

Funds Rollover From Year to Year

1

There is no limit to how much you can save. Funds r are not "use it or lose it."

2 Contributions are Flexible

You are not locked into a contribution amount during the year. If your health or nancial circumstances change, you can increase or decrease your contribution amount...just stay within the IRS maximum!

More Benets at Age 65

3

After you turn 65, you can continue to use your HSA for qualied medical expenses or you can use the funds for nonqualied expenses. If you use the funds for non-medical needs, you will be taxed, but you will not be penalized.

Flexible Spending Account FSA

For employees enrolled in a nonqualied high deductible plan or for those that waive coverage

Employers partner with Third Party Administrators to give you access to pre-tax funds via debit card or claim reimbursement.

Must use the funds on qualied medical expenses for you and your tax dependents only

The money is generally "use it or lose it," meaning it must be spent within the plan year.

Understanding all the details.

If this plan is available to you, ask your employer for a copy of the Summary Plan Description to understand all the rules.

There are annual maximum contribution limits.

You must verify expenses as qualied using a smart debit card or by submitting paperwork to the Third Party Administrator.

Benets of an FSA beyond Pre-Tax Savings

1 The Money is Available on Day One

The full balance of your annual election is availa spend on qualied expenses on the rst day of t though you have not contributed the full balanc this is also why you are generally unable to make contribution changes.

2 Eligible Dependents

You can use the funds on qualied medical, dental and vision expenses for any qualied tax dependent.

3 A Limited Option May Be Available

For those enrolled in an HDHP and contributing to an HSA, a Limited FSA (reimburses dental & vision expenses only) may be available.

One last option... Dependent Care FSA

The second type of FSA is a dependent care FSA. This allows you to use pre-tax funds to pay for the care of a dependent under age 13, day care center or before or after school programs. Care for a disabled spouse, parent or child over the age of 12 is also eligible for reimbursement.

Let's Review

HSA

Must be enrolled in a Qualied High Deducible Health Plan to be eligible

FSA

Flexible Spending Account

You do not have to be enrolled in a qualied High Deductible plan to participate

Funds must be in the account in order to spend them

Money rolls over year to year

You can change your contributions at any time

Your full contribution is available to spend on the rst day of the plan

Generally, contributions are "use it or lose it" and must be spent within the plan year

You are only able to change your contribution in limited circumstances