If your employer is offering flexible spending account benefits, you will want to take advantage of the opportunity for you and your family’s health care needs. In this article, we will talk about what health care flexible spending accounts are, how they work, and the benefits that come with them.
Acupuncture in Irvine
If you are looking for Acupuncture in Irvine and you are thinking about how to pay for the treatment, we accept Flexible Spending Accounts. Contact us or visit our office for a consultation.
What is a Health Care Flexible Spending Account?
A health care flexible spending account (FSA) is a special medical savings account that is tax-free. It is also known as a flexible spending arrangement. You can use your FSA for certain health care treatments and expenses, including acupuncture. Because FSAs don’t come with taxes, you will be able to save on the money that you put into the account for future out-of-pocket medical needs.
You are also the one deciding how much to contribute to your account. So, flexible spending accounts are a great option when you anticipate any health care expenses for the year for you or your qualified dependents.
How do flexible spending arrangements (FSAs) work?
If you choose to open an FSA, you can do a voluntary contribution of an amount from your earnings into your account. Since the money that you put into the account is already deducted before income taxes, it is not subject to payroll and income taxes. Depending on your employer, they can also choose to contribute to your FSA as part of your employee benefits, but they are not required to do so.
If you have your healthcare through your employer, you can use your FSA contributions for co-payments, certain prescription and over-the-counter medications, and deductibles. You can use your contributions to reimburse you for qualified medical treatments, including acupuncture. Expenses for your general healthcare such as gym memberships and cosmetic procedures or items are not covered or reimbursable. Insurance premiums are also not covered by your FSA.
Note that your contributions to your flexible spending account are usually only available until the end of the current year. However, employers may decide to provide a two-and-a-half-month grace period in the following year, or they can provide $500 for your FSA in the subsequent year.
Where can I use my Health Care Flexible Spending Account?
Here are examples of medical treatments and items covered in your flexible spending account. You can use funds from your FSA for yourself, your legal spouse, or your children.
- Graded eyeglasses
- Covid-19 tests and PPE
- Prescription medications
- Over-the-counter medications such as colds and flu medicine, pain reliever medications
- Breast pumps
- Chiropractor treatment
- Pregnancy tests.
- Diabetes medications
- Blood sugar test
- Crutches and bandages
- Birth control pills
- Psychological treatment.
- Smoking cessation programs
You may visit the Internal Revenue Service (IRS) website for a full list of health care expenses that they determine eligible. The IRS may change the list from time to time, so make sure to check their website from time to time.
Health Savings Account (HSA) vs. Flexible Spending Arrangement (FSA)
Some confuse a health savings account with a flexible spending arrangement. While both have similarities (such as tax privileges that can save you money), both accounts are different from each other in the way they work. Here are the reasons why:
- FSAs are put up by an employer while HSAs are owned by the individual and would need you to be under a high deductible health plan (HDHP)
- Because FSAs are set up by your employer, it is possible that you will lose your contributions if you change jobs. On the other hand, contributions in HSAs can be carried over even if you change your employment.
- Funds in an FSA should be used by the end of the year, or they may be forfeited if your employer chooses. On the other hand, your funds in an HSA are carried over to the next year.
However, it’s possible that your employer will provide you with a 2.5 month grace period so you can still use your FSA even after its expiry. Another possible scenario is that your employer can decide to roll over $500 into your FSA for the next year. Your employer may only choose one option, and they are also not required to do so.
- FSAs have lower annual contribution limits of up to $2,650 per individual and $5,300 per household. You can contribute up to $3,450 per individual and $6,900 per household for HSAs.
- You can only change your contributions to your FSA during specific times. For example, during an open enrollment period and changes in your family situation (e.g. giving birth, adopting a child, getting a divorce, etc.). Meanwhile, you can change your contributions to your HSA at any time.
Flexible Spending Account: What are the benefits of having one?
The biggest advantage of having a health flexible spending account is the tax advantage that you get. Since your contributions to your FSA are transferred pre-tax, it means that you will have less taxable income and more of your salary to spend.
Another advantage is that you are able to easily budget for medical, dental, or vision expenses without spending a huge amount of money in the first place. How it works is that you will receive your health FSA election amount at the start of each year, and then you get to pay it back throughout the year through a tax-free payroll deduction. This makes it easier for you to pay for the expenses, and it works just like a zero-interest loan.
FREQUENTLY ASKED QUESTIONS
Can I use my health FSA to pay for my spouse or child’s medical expenses?
Yes! You can use your FSA for your legal spouse and your children ages 26 years old and below.
What if my spouse or child is enrolled in a different health insurance plan?
Regardless of which medical insurance they are enrolled in, you may still use funds from your health care FSA to pay for eligible medical costs for both your spouse and tax dependents. Note that using funds for your dependents must be claimed on your tax return.
How much should I contribute to my FSA?
There is no specific amount that’s true for everyone since your election amount will depend on your individual situation. It’s entirely up to you how much you want to contribute to your FSA as long as it is within the limits set by your employer.
Given that unused funds in your Health FSA may be forfeited by your employer in the next year, it is wise for you to carefully assess your or your family’s potential medical, dental, and vision expenses for the year.
A good way to start is to examine the healthcare expenses you’ve had the previous year. Were there any recurring prescriptions and doctor appointments you’ve had to make? Were there medical treatments in the past year that were not covered by your insurance, but you now have the opportunity to fund through your FSA? These treatments can include chiropractor and acupuncture visits. Anticipating these expenses will help you come up with the right selection, and you will avoid having unspent money in your FSA by the end of the year.
Do I need to be covered by my employer’s health insurance plan to open an FSA?
It is not necessary for you or your dependents to be enrolled in your employer’s health insurance plan for you to open a flexible spending arrangement. They are separate from each other.
I’m interested in acupuncture, can I use my health FSA in your clinic?
Acupuncture treatment is part of the list provided by the IRS that is eligible to be paid using funds from your health flexible spending account. At Irvine Meridian Health Center, we accept flexible spending accounts as a form of payment for your acupuncture care. Many of our clients also use their flexible spending accounts for their acupuncture treatment.
Not all health care treatments that you need are covered by your health insurance, so a flexible spending account is certainly one option that you can take for out-of-pocket medical expenses. If you are interested in Acupuncture in Irvine, but your insurance does not cover acupuncture, don’t fret as you can use your FSA if needed.
Contact our office to schedule your consultation.