Flexible Spending Accounts
What’s an FSA?
Flexible Spending Accounts are similar to HSAs in that you can use pre-tax dollars to pay for eligible medical, dental and vision expenses. Because an FSA can be used to pay for very similar expenses as an HSA, the IRS will not allow employees to have both types of accounts during the same plan year. This means that if you participate in a FSA plan, that is not considered a limited purpose FSA plan, you may not open and contribute funds to an HSA during the same plan year. However, this does NOT impact your ability to enroll in the Dependent Care portion of an FSA (just the Health Care).
Reminder : You must re-enroll in FSA for 2023. Your prior year election does not roll over.
|Flexible Spending Account (FSA)||Health Savings Account (HSA)
|Eligibility requirements||No eligibility requirements||Eligibility requirements include having a consumer-driven health plan (CDHP)|
|2023 contribution limit||$3,050 per employee||$3,850 for individual / $7,750 for family
|Catch-up contributions||No||If you are over age 55 you may contribute up to $1,000 more to your account per year
|Who owns the account?||Employer||Employee
|Changes to contributions||Only for qualifying events, such as a marriage, divorce, birth, or during open enrollment||On a monthly (per paycheck) basis
|Debit card available?||Yes||Yes|
|Balance carry over (or rollover)||Plan has a 90 day run out period to submit claims incurred during the plan year||Yes. Unused funds carry over to the following year
|Portability and forfeiture||Not portable. You lose any unspent money in an FSA when employment is terminated. Exception: if you’re eligible for FSA continuation through COBRA||Yes. HSA balance is not forfeited when you change employers or health plans
|Access of funds||Money can be accessed before it is paid in||Only funds paid in can be accessed
|Proof of expenses required?||Yes||No; however, you should be prepared to substantiate to the IRS the expense has been incurred, the amount of the expense, and its eligibility
|Non-medical expenses||FSA funds cannot be used for non-medical expenses||HSA funds can be used for non-health care distributions but are included in gross income and subject to a 20% penalty if under age 65
|Is interest earned on the account?||No||Yes; amount varies by HSA bank
|Effect on taxes (varies by state)||Contributions are pretax and distributions are untaxed||Tax-free contributions when you contribute to the account, tax-free interest on your HSA balance and investment gains, and tax-free withdrawals for qualified medical expenses
As you can see, the HSA plan has some great advantages over an FSA Plan. HSA allows for greater annual tax-free contributions. Also, the money you put into your HSA can roll over from year to year, and remember – you take the account with you should you leave or retire.
Jackson Family Wines’ FSA plans are administered by WEX (formerly name Discovery). Employees can make an annual election which will be payroll deducted in equal, pre-tax increments over the course of the plan year, January 1st through December 31st. Please be careful not to over-estimate your costs when electing your annual contribution. These benefits require re-enrollment into the plan each year.
For employees enrolled in the Anthem Advantage PPO/HSA medical plan: You may only enroll in the Limited Health Care FSA. Only non-medical expenses (such as dental and vision) are eligible under a Limited Health Care FSA. Refer to page 4 to learn more about Health Savings Account (HSA). Enrollment in the Anthem Advantage PPO/HSA medical plan does not impact your eligibility to enroll in the Dependent Care FSA.
Just Reminder : Due to Health Care Reform, over-the-counter drugs such as aspirin, Tylenol and Benadryl will not be reimbursed under the FSA plan unless a doctor’s directive (prescription or letter of necessity) is provided and forwarded with the claim.
|Plan||Description||Maximum annual contribution for Health Care FSA Plans
|Health Care FSA||The Health Care FSA allows employees to receive reimbursement for eligible expenses, such as copays, coinsurance, deductibles, prescription drugs, dental services, eye glasses, contact lenses and other health related services.||$3,050
|Limited Health Care FSA (HSA participants)||The Limited Health Care FSA allows employees to receive reimbursement for eligible NON–MEDICAL expenses (such as dental and vision). It is important to note that because you are contributing to a HSA, only non-medical expenses are eligible expenses. Refer to page 4 for information on how a Health Savings Account (HSA) can be used to pay for eligible expenses.||$3,050|
|Dependent Care FSA||The Dependent Care FSA allows for reimbursement of day care expenses for dependent children up to the age of 13 as well as for custodial care for elderly or disabled adults. Any unused funds left in your account at the end of the plan year will be forfeited, per IRS regulations.||$5,000 ($2,500 if married and filing separately)
How to use your WEX (formerly named Discovery) debit card:
You have a doctor office visit. Your office visit copay is $20. Instead of paying the doctor in cash or a check, you use your FSA debit card (used like a credit card) to pay your office visit copayment.
The doctor gives you a prescription to have filled. You go to the network pharmacy and are charged $25 for your prescription co-pay. You use the FSA debit card to pay for your $25 prescription co-pay.
You are hospitalized. After the insurance company has paid your share of the bill, there remains $1,200 in expenses you are responsible for (comprised of your deductible and co-insurance amounts). You pay the bill using your FSA debit card.
You go to the dentist to have a cavity filled. You use your FSA debit card to make your coinsurance payment of 10%