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There's no doubt that the gig economy is growing. About 11% of U.S. workers are full-time contractors, according to Nation1099. Freelancers are also on the rise. Popular freelancing platform Upwork's report that 57.3 million people in the U.S. freelance full time.
And one of the reasons for this steady surge toward home-based employment? Parenting and child care, and the ability to make your own hours to accommodate for a growing family's always-hectic schedule.
A quick note on freelancing vs. contracting
A few weeks ago, we discussed the availability of FSAs to freelancers. But there's an important distinction to be made between freelancers and contractors. Freelancers work for themselves, often doing work for various clients simultaneously. A contractor usually has a signed contract with one client to perform a specific role for a set period of time.
If you're a contracted worker, chances are, you enjoy the freedom that comes along with working when you want, where you want, or even moving on when the work no longer interests you.
Let's start with the answer you want
Unfortunately, the IRS says that self-employed workers aren't eligible for FSAs. I know, that hurts a bit. If you have a spouse that's eligible for an FSA through their employer, they should consider opening one, since you and any dependent children are also eligible to use those funds.
There are other options (especially if you have children)
There's good news for those with children: If your spouse can give you access to an FSA, you can use your FSA to pay for approved over-the-counter medical items like contact lens solution, nasal spray, breast pumps and accessories, and even copays. Items containing an active medical ingredient like acne medication, sleep aids, and allergy medication are also eligible with a valid prescription.
You can also consider a dependent care FSA, which can be used to pay for childcare for a child 12 and younger. Specifically, summer camps, preschool tuition, and daycare to name a few.
Finally, you might want to consider opening an HSA if you're self-employed and currently enrolled in a high deductible health plan (HDHP). HSAs are similar to FSAs in that they cover medical expenses like OTC medicine, prescriptions, and copays.
Worth noting: Generally, you can't have both an HSA and an FSA (with limited exceptions).
The child tax credit (CTC) and the additional child tax credit (ACTC) can also help offset the cost of childcare. These tax credits are up to $1,000 per qualifying child. The child must be under 17, have lived with you for at least half of the tax year, and be a U.S. citizen.
Worth noting: If you feel you have been improperly classified as an independent contractor and should be an employee, you may be eligible to change your status with your employer and gain access to benefits like an FSA.)
So be sure to explore your tax advantaged options when it comes to defraying the cost of childcare. Because let's face it: Even home-based workers need a little help sometimes.
Whether you budget week-to-week, or plan to use your FSA for bigger things, our weekly Real Money column will help you maximize your flex spending dollars. Look for it every Tuesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
Lowering the cost of healthcare is a smart move, no matter how you look at it. Aside from paying lower premiums and taking care of your overall health, many people take advantage of tools that help make their health care costs tax deductible. These include a health savings account (HSA) and a flexible savings account (FSA).
Even though they're referred to interchangeably, these are very different types of accounts. Both HSAs and FSAs are similar in that they help you make qualified health purchases using tax-free funds. But with limited exceptions, you can't have both. This means if you want to take advantage of your employer's flexible spending account, you may not be able to contribute to your HSA.
There are some instances in which you may be able to elect both accounts at once. You can technically have both if you have a certain type of FSA and meet the qualifications of an HSA.
Run of the mill just won't do
First, let's quickly go over what you need to qualify for an HSA:
- You're currently covered under a high-deductible health plan (HDHP)
- This plan has an minimum annual deductible of $1,350 or $2,700 for families
- Your plan has an annual out of pocket maximum of $6,750 (or less) or $13,500 for your family
- You aren't currently on Medicare or supplemental health care plan (including a spouse's employer- sponsored plan)
- You're not considered a dependent under anyone else's tax return
- You're not covered under other disqualifying health coverage, including yours or your spouse's enrollment in a traditional FSA
An FSA counts as "other health coverage," according to IRS Publication 969. So your run- of- the- mill FSA will probably not be compatible with an HSA. And it's important to note that if your spouse elects an FSA that's not compatible with an HSA, your ability to contribute to an HSA goes out the window, as you're technically considered covered under that FSA (whether your spouse adds you as a dependent to the plan or not).
If your employer offers either a limited-purpose health or a post-deductible health FSA (also referred to as an "HSA-compatible FSA"), start celebrating! It means you can have an HSA alongside your FSA. And who doesn't want more tax-free spending on qualified medical expenses?
It doesn't have to be confusing...
Before running off and opening an FSA alongside your HSA, make sure you understand the pros and cons of each. Look carefully at your lifestyle to see if it even makes sense. You want to know if you'll be able to use up your FSA funds as you'll lose them after the end of the plan year (with the exception of those with deadline extensions or a $500 rollover).
This type of account typically only allows you to spend money on qualified dental and vision expenses. The account can also be used for your spouse and qualifying dependents including children through the age of 26.
Let's say your spouse goes to the dentist only to find out he needs a root canal within the next few months. It might make sense to contribute to a limited-purpose FSA because you can save your HSA funds for something else. You can then make a contribution to your limited-purpose FSA for the root canal.
Remember to check with your plan administrator or HR department about all of the details of your plan, including which plan will automatically pay first. If the plans are set up so that your HSA funds are withdrawn first, you may want to see if it's possible to have FSA-eligible expenses withdrawn from the FSA first, or if you'll have the ability to request that they be transferred from the HSA to the FSA.
This isn't a common type of FSA. Before you hit your minimum deductible for the year, expenses are limited to dental and vision only with this account. Once you hit your minimum HSA deductible for the year, you can use the money from the post-deductible FSA account for all qualified medical expenses.
Just remember that if you reimburse an expense from your HSA, you can't also do it with your FSA.
So, let's say your minimum deductible is $2,700 for your family in your HSA. You can still access your post-deductible FSA for any vision and dental expenses until you reach $2,700 in expenses incurred that apply to your deductible. This plan would make sense to those who anticipate vision and dental expenses, or expect to set aside more than the HSA will allow.
Yes, you can have an FSA with an HSA
As long as your employer offers either a limited-purpose or post-deductible FSA, you can keep your HSA with no issues! Remember, FSA funds disappear after the plan's year is over with a few exceptions, so make sure you'll definitely use that money before making any contributions.
If so, you can let your HSA contributions compound and grow while still being able to take advantage of tax-free medical spending.
From FSA basics to the most specific account details, in our weekly Asked and Answered column, our team gets to the bottom of your most-pressing flex spending questions. It appears every Wednesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
For many people, FSAs provide an element of security when it comes to handling health care costs. The tax breaks that come along with them are an added bonus.
But FSAs are usually talked about in terms of a health plan through a standard employment arrangement, which leaves many of you out there who are self-employed wondering: what about me? Let's deep dive into the nuances of FSAs for the self-employed so that you know what your options are.
Self-employment and FSAs
FSAs are special types of accounts that allow employees to contribute money that can later be used for out-of-pocket healthcare costs like copayments, deductibles, and prescriptions.
This money is not taxable, which means you'll save the same amount of money that you would have had to pay taxes on, which is a nice little bonus. Employers also have the option of making contributions to an FSA.
The drawback with FSAs is that if you're self-employed, you're not currently eligible to open an FSA. Only permanent employees working for a company that offers an FSA option can enroll in the program. You can however set up an FSA for your employees and save on the Social Security and Medicare taxes for contributions your employees make to the plan.
Because of the way that FSAs are set up, if you're self-employed, you'd be making contributions to yourself, which isn't allowed. Current laws don't allow you to pay yourself by depositing money in an FSA, but there's hope, thanks to another way to get your tax break!
Tax-free funds for the self-employed
The good news is that if you're self employed, you do still have options to help defray the costs of your healthcare, including setting up a health savings account (HSA). While an HSA is very different than an FSA, its benefits – and the way it's set up – have some similar traits and tax-savings.
With an HSA, you can use the money for physicals, check-ups, prenatal care, immunizations, weight loss programs and screenings for cancer, heart disease and vision and hearing disorders.
To open an HSA, you:
- Must be enrolled in a high-deductible insurance plan (HDHP)
- Can't be enrolled in other medical coverage, including Medicare
- Can't be claimed as a dependent on someone else's tax return
To meet the "high-deductible" requirement, your deductible must be between $1,300 to $6,500 per year for an individual, and $2,600 to $13,000 per year for families.
Other important things to know about HSAs include:
- Contributions are tax-deductible
- Your contributions earn tax-free interest
- Qualified distributions from your HSA are tax-free
- You can invest your contributions in stocks, bonds, and mutual funds
- Your funds don't expire, so your money rolls over every year, which isn't a feature of FSAs
One last thing to keep in mind about HSAs is that as of 2017, you can only contribute a maximum of $3,400 annually for individual coverage, and $6,750 for family coverage. If you're 55 or older, you can contribute an additional $1,000 to your individual or family plan.
If you're self-employed and always wanted to enjoy the same tax savings as your friends with FSAs, take another look at opening a health savings account! The accounts might be different, but the same tax-free funding is there to help with all your medical needs.
New to FSAs? Need a refresher course in all things flex spending? Our weekly Flex-Ed column gives you a weekly dose of FSA Living 101, offering tips for making the most of your tax-free funds. Look for it every Thursday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
At open enrollment, one of the most daunting tasks can be deciding on the best health insurance plan option that meets your needs and the needs of your covered dependents. There are often many choices, and the language used although intended to be very clear, can actually be quite confusing. (We're here to eliminate that confusion...)
Before choosing a health insurance plan, be sure to ask questions, predetermine your health expenses and health care needs for the year ahead and research all of the variables of the plan options available to you.
A good place to start is the Summary of Benefits and Coverage, which should be provided to you prior to your open enrollment election and can provide the basic information you need to make the most informed choice possible.
While the variables of each plan offered can differ greatly, the basis of the plan designs are consistent. To help you prepare for the difficulties in choosing a health plan that makes the most sense for you, here are some of the basics for the various types of employer sponsored health plans that are offered.
[Note: This list does not include individually purchased health plan options or options available through the exchange.]
Commonly offered employer-sponsored health plan choices:
- Preferred provider organization plans (PPOs): PPOs allow individuals to use any of the plan's preferred providers within their extended network, including specialists, without the need for a referral. PPOs can vary in terms of out-of-pocket expenses, but they typically will require a copay for certain types of expenses and many may even require you to meet a deductible up front.
- Health maintenance organization plans (HMOs): HMOs allow covered individuals to use any provider within an extended network but require that individuals first choose a primary care physician (PCP) who will coordinate all of their extended care.
Once a PCP is chosen, covered individuals must see their them for referrals to certain specialists. Deductibles and copays may apply and will vary by plan design.
- Exclusive provider organization plans (EPOs): EPOs allow covered individuals to see any of the physicians within the assigned EPO network, typically without the need to assign a preferred provider or to obtain referrals. Often times EPOs will not provide any coverage for services rendered outside of the EPO network, so individuals must be certain to check the network of approved EPO providers before choosing this type of plan. Deductibles and co-pays may apply and will vary by plan design.
- Point-of-service (POS) plans : POS plans are a combination of the traditional HMO and PPO plan. You are typically free to see any provider within a large covered network and may be required to assign a primary care physician for regular office exams and wellness visits.
With POS plans, you are usually free to also use providers which may be out of the plan's network, and will often pay higher amounts for these services. Deductibles and copays may apply and will vary by plan design.
- High-deductible health plans (HDHPs): HDHPs can come in many forms, including PPOs, EPOs and HMOs. HDHPs are designed to incentivize covered individuals to make better choices in regard to their care.
By requiring individuals to meet a set dollar amount up front before their health insurance plans will cover certain expenses or all expenses, similar to the way in which you would meet a deductible with car insurance, HDHPs are intended to force the consumer to think about their medical needs and choices before receiving treatment, perhaps even shopping around for a better price. By having more “skin in the game," HDHPs are intended to create a more-informed consumer.
Qualified HDHPs can also be offered with health savings accounts (HSAs). In order for an HDHP to be HSA-qualified, the deductible requirement may be no less than $1,400 in 2020 for self-only coverage ($2,800 for family coverage). To be HSA-qualified in 2020, the maximum annual out-of-pocket costs cannot exceed $6,900 for self-only coverage ($13,800 for family coverage). Limits are increased for inflation each year.
- Employer-sponsored plans: When making your choices for the best health insurance plan to meet your needs, consider all options available to you. Many of the aforementioned plans will be offered with various types of employers sponsored plans, including flexible spending accounts (FSAs), health reimbursement arrangements (HRAs) and health savings accounts (HSAs). When making the choice that most closely meets your needs, don't forget to consider all options available to you.
More open enrollment articles
- Mercer's projected 2020 FSA contribution limits are here
- Speaking to millennials at open enrollment
- It's never too early to map out your open enrollment
- How I've handled career transitions and insurance options
- I'm young and healthy … why would I want an FSA?
- Can I make mid-year changes to my FSA?
The renewed healthcare debate in Washington over possible replacements to the Affordable Care Act (ACA) has left many Americans scrambling to learn more about possible changes to their health coverage. However, as pivotal as these plans are to individuals and families' long-term health and financial stability, recent surveys have shown that Americans lack a critical understanding of some of the most common terms related to health insurance plans.
A recent survey conducted by PolicyGenius of 2,000 American health insurance consumers found that less than half understand how their health plan works. The survey found a 25% gap between consumers' perceived and actual knowledge of these key health insurance terms: “deductible", “co-pay", “coinsurance" and “out-of-pocket maximum."
At FSAstore.com, we are committed to educating our customers about healthcare benefits and the potential of consumer-directed healthcare accounts like FSAs and HSAs, and we don't want to leave you flat-footed when it's time to choose a health plan! Here are the terms you must know to make an educated decision with your healthcare benefits.
An insurance plan's deductible is the amount that a plan holder has to pay out-of-pocket before the insurance company will begin to cover the costs of qualifying medical services. For instance, if you are enrolled in a plan with a $1,500 deductible, you will have to cover the cost in full of most medical expenses until you meet the $1,500 threshold, at which point the health insurance plan will begin coverage for qualifying expenses. Note that some expenses, such as prescriptions, often fall outside of the plan deductible requirements.
Many health plans will offer a type of co-payment or co-insurance arrangement where the plan holder will pay a portion of the overall cost of the healthcare service. In the case of co-payments, these are fixed amounts that are paid for a health care service, which can vary for different services within the same plan, such as prescription medicines, doctor's office visits and consultations with medical specialists. In most cases, plans with lower monthly premiums have higher co-payments, deductibles or co-insurance, while higher monthly premium plans will have lower co-payments.
Co-insurance is a different type of cost-sharing arrangement than a co-payment in which the plan holder will split the costs of a health plan service, often after a deductible has been met. For instance, if an individual's insurance plan offers a 70/30 split for medical expenses after the deductible is met, an expenditure of $100 would mean that the insurance company would pay $70, while the account holder pays $30. Depending on the structure of the healthcare plan, co-insurance splits may also vary if a patient goes outside of his/her physician network, at which point a larger cost-sharing split may be required for these services.
- Out-of-Pocket Maximum
With all of the previous terms in mind, the out-of-pocket maximum is an important number to keep in mind when choosing a health plan. The out-of-pocket maximum is the most a person will pay over the course of a year in deductibles, co-payments or co-insurance, after which point the insurance company will pay 100 percent of all covered health expenses for the rest of the year. So if a plan has a $6,000 out-of-pocket maximum, the plan user would have to incur $6,000 worth of deductible, co-payment or co-insurance payments out-of-pocket before the insurance company began covering expenditures in full.
For everything you need to keep your family healthy year-round, rely on FSAstore.com! We have the web's largest selection of FSA-eligible products to help you maximize the potential of your healthcare benefits.
Invisalign Braces are eligible for reimbursement with a flexible spending account (FSA), health savings account (HSA), health reimbursement arrangement (HRA) and a limited care flexible spending account (LCFSA).
Unlike an FSA where money is forfeited at year end if not used, HSA money rolls over from year to year. The money in your HSA is yours to keep and use as you wish. Even if you no longer have HSA-eligible HDHP coverage, you may still continue to keep and spend down your HSA.
Open enrollment is your opportunity to make changes to your employee benefits elections and choose health coverage that will protect you and your loved ones for the year ahead. However, if your employer offers some type of health care or child care savings/spending account, you may be missing out on hundreds -- if not thousands -- in tax savings for expenses that you will incur over the course of the coming year.
Luckily, FSAstore.com/HSAstore.com is here to help you navigate the confusion of consumer-directed spending/savings accounts to find the plan that works for your needs. Here are four of the most common offerings:
|Flexible spending account (FSA) (also known as general medical FSA)|
|Yearly Contribution Limits||$2,700 per FSA (2019). If both spouses have an FSA through their respective employers, they could each elect the maximum for $5,400 per household.|
|Plan Year||Most often 1 year. In limited circumstances, there may be a short plan year.|
|Eligibility to Contribute||FSA plans can only be sponsored by employers and eligibility rules are set by each plan. Employees who work for employers who offer FSA plans may contribute up to the allowed maximum per year. Self-employed individuals and owners of certain types of corporations are not eligible for an FSA.|
|Account Ownership||An FSA account is owned and set up by the employer.|
|Access to Money||An employee's yearly FSA allocation is available in full on the first day of the plan year, regardless of contributions to date.|
|Change Contributions?||FSA users can only change their contributions during their Open Enrollment periods. Some plans also allow changes to contributions to be made if the account holder experiences a Qualifying Life Event, such as marriage, divorce, or birth of child.|
|Special Rules/Eligibility Exceptions||Employers can choose one of two (or none) options to provide relief for FSA users who would otherwise have to forfeit leftover funds: the $500 rollover and the 2.5 month grace period. The $500 rollover allows FSA users to move up to $500 of the previous plan year's contribution into next year's allocation (without counting against the overall contribution limit) to avoid forfeiting money to their employers at year end.|
The second is the FSA Grace Period, which gives users 2.5 months after the last day of their plan years to spend down their remaining FSA funds.
For more information about what an FSA can cover, visit the FSA Eligibility List.
|Health savings account (HSA)|
|Yearly Contribution Limits||$3,550 Individual, $7,100 Family (2020). Employee and employer contributions both count towards the limit.|
|Plan Year||There is no plan year with an HSA, funds rollover continuously each year and do not expire.|
|Eligibility to Contribute||An HSA can only be opened by a person enrolled in a qualified high-deductible health plan (HDHP) with a deductible of at least $1,400 (self-only coverage) or $2,800 (family-only coverage). The individual must not have other first dollar health insurance coverage, including an FSA. For calendar year 2020, a "high deductible health plan" is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,900 for self-only coverage or $13,800 for family coverage.|
|Account Ownership||An HSA is owned by the account holder and is a bank account set up in the owner's name. Account beneficiaries can be assigned.|
|Access to Money||Remaining HSA account funds can be accessed at any time regardless of whether or not the person is actively contributing to the HSA.|
|Change Contributions?||HSA users can change their contribution amount at any time, as long as it does not exceed the yearly allocation limit. It is up to the HSA account holder to track contributions and ensure they do not exceed the annual limit.|
|Special Rules/Eligibility Exceptions||Unlike FSAs, HSAs can cover the cost of certain premiums, but otherwise follow nearly identical eligibility requirements. For more information about what an HSA can cover, visit the HSA Eligibility List.|
|Limited care flexible spending account (LCFSA) (also known as limited purpose FSA)|
|Yearly Contribution Limits||$2,700 per FSA (2019). If both spouses have an FSA through their respective employers, they could each elect the maximum for $5,400 per household.|
|Plan Year||Most often 1 year. In limited circumstances there may be a short plan year.|
|Eligibility to Contribute||LCFSA plans can only be sponsored by employers and eligibility rules are set by each plan. Eligible employees may contribute up to the allowed maximum per year. Self-employed individuals and owners of certain types of corporations are not eligible for an LCFSA. However, unlike general medical FSAs, LCFSAs will usually only cover qualifying dental and vision expenses.|
|Account Ownership||An LCFSA account is owned and set up by the employer.|
|Access to Money||An employee's yearly LCFSA allocation is available in full on the first day of the plan year.|
|Change Contributions?||LCFSA users can only change their contributions during their Open Enrollment periods, or if the plan allows, if they experience a Qualifying Life Event (marriage, divorce, birth of child, etc.)|
|Special Rules/Eligibility Exceptions||An LCFSA typically does not qualify as "first-dollar" coverage, and therefore an account holder can open up both an LCFSA and an HSA if they so choose. Participating in both plans allows employee to maximize their savings and tax benefits.|
To qualify as employment-related expenses, care must be for a qualifying individual. A “qualifying individual" means:
· A dependent under age 13.
· The taxpayer's spouse. If the spouse is physically or mentally incapable of caring for himself or herself, and has the same residence as the taxpayer for more than half of the year.
· A dependent of the taxpayer (i.e., a qualifying child or qualifying relative could be an older relative) must be physically or mentally incapable of caring for himself or herself, and have the same residence as the taxpayer for more than half of the year.
Which expenses are covered?
- Before- and after-school care.
- Adult care of a relative who spends at least eight hours a day at your home.
- Child care at a day camp, nursery school, or by a private sitter (or by a non-tax-dependent relative). Babysitters cannot also be claimed as dependents (an older relative must be at least 18 years old).
- Adult day care center.
- Transportation by caregivers.
- Expenses for a housekeeper who also handles dependent care.
- Day camps.
- Late pick-up fees.
Expenses not covered:
Any care that is not work-related will not be covered under your DCFSA.
- Overnight camps
- Long term care (nursing home)
- School tuition or education fees, meals or food.
For more information about what your DCFSA covers, visit our Eligibility List.
|Dependent care flexible spending account (DCFSA)|
|Yearly Contribution Limits||$2,500 individuals, $5,000 if filing taxes jointly. (2019)|
|Plan Year||Most often 1 year. In limited circumstances there may be a short plan year.|
|Eligibility to Contribute||DCFSA plans can only be sponsored by employers. Employees can open an DCFSA regardless health plan enrollment. DCFSAs let you use tax-free money to cover child care for qualifying children or adult dependent care for qualifying adults and relatives. You or your spouse must be working, searching for work, or attending school full-time in order to qualify for the DCFSA.|
|Account Ownership||A DCFSA account is owned and set up by the employer.|
|Access to Money||DCFSA funds are available as they accumulate within the account. Only expenses for services already incurred will qualify for reimbursement.|
|Change Contributions?||DCFSA users can only change their contributions during their Open Enrollment periods, or if they experience a Qualifying Life Event (marriage, divorce, birth of child, etc.)|
|Special Rules/Eligibility Exceptions|
- Internal Revenue Bulletin: 2019-22
- 2020 HSA Limits Rise Modestly, IRS Says
- 2019 FSA Contribution Limits Announced by IRS
More Open Enrollment articles
A timeline of tax-free health care
Flexible spending accounts (FSAs) and health savings accounts (HSAs) are currently the most popular consumer-directed, tax-free health care accounts in the U.S. today. The term "consumer-directed" refers to insurance plans that pay for common medical expenses like checkups and emergency care, but also contain a separate account to help you further reduce your out-of-pocket health care costs.
As the time of year when you can elect benefits, make changes to existing plans and take advantage of new offerings, Open Enrollment is a crucial task for any employee. Depending on your plan year structure, your Open Enrollment period may be weeks or months away, but it's never too early to start thinking about your health coverage for the coming year.
When your Open Enrollment period approaches, these 5 tips can help you get a head start on your benefits election!
- Calculate Your Yearly Medical Expenses
While medical expenses can be unpredictable, in many cases you may already know how much you and your family members are going to spend over the course of a year. As you calculate your expenses, think about:
- How often you visit doctors/specialists (and your dependents as well)
- How much you pay yearly for prescription drugs
- Will you be taking on any new dependents in the coming year? (birth of a child, caretaking adult dependent)
- How much a health plan will cost over a year
- Evaluate Your Plan Provider Network
Even over the course of a year, your company's provider network could have changed drastically. Doctors groups could join together and hospitals and health systems could re-contract with insurers which could change your benefit options. Your employer and health administrator have a number of tools and resource that can help you assess the cost impact of your health plan choices and the overall quality of these plans when making your health plan choices.
- Vision/Dental Insurance
In addition to health coverage, vision and dental plans are an important facet of the open enrollment process. Some health plans may already include this, others may act as standalone benefits. Most companies will offer vision benefits plans or vision discount plans. A vision benefits plan operates like traditional insurance where a premium is paid in exchange for eye care coverage and some coverage for qualifying vision correction aids like frames and lenses. Additionally, a vision discount plan, typically offers lower premiums, but will only provide a percentage off qualifying vision expenses and products.
In regards to dental coverage, this is usually much simpler and should be based on your overall health needs. If you only anticipate regular cleanings and checkups, a low-priced dental plan would be best. However, if you anticipate major dental expenses such as root canals, oral surgery or orthodontic expenses in the coming year, a more comprehensive dental plan could be better for your bottom line.
- Is a CDHP right for you?
Consumer-directed healthcare plans like flexible spending accounts (FSAs), health savings accounts (HSAs) and more are funded through the employee's own pre-tax funds and can be used on qualifying health expenses. This offers the benefit of paying less in taxes each year through monthly payroll deductions, and they can even be funded by employers as well. Individuals or families can open these accounts, and they can provide a major boost for those who maximize their benefits. Learn more in our outline of the most common CDHPs. (will hyperlink)
- Take Advantage of Health & Wellness Programs
Health and wellness programs have become increasingly popular amongst employers who encourage their employees to get and stay healthy - which can save both the company and the employee plenty in the long run! Some common programs include health assessments, weight loss programs and health coaching, which could help you better understand your health status and make more informed health plan choices in the future. Some companies also provide financial incentives to those who participate in programs and meet specific goals, so this is a benefit that you definitely don't want to miss out on!
Still have Open Enrollment Questions?
After the legislative fireworks that followed the last attempt to repeal and replace the Affordable Care Act (ACA) in late July, the political landscape surrounding healthcare has been largely quiet throughout the summer. While wholesale changes to the American healthcare system may have been put on hold for the time being, there is still continued support for expansion of HSAs on both sides of the aisle.
HSAs remain popular among the GOP and Democrats
According to the Washington Examiner and Larry Levitt, senior VP of the nonpartisan Kaiser Family Foundation, "Allowing health savings accounts to be used to pay premiums, an idea advocated by conservatives, could provide premium relief to middle-class consumers and help to shore up the market."
According to a new study conducted by Devenir Research, HSA assets grew 23 percent to $42.7 billion over the trailing 12 months ending on June 30, and the number of accounts grew 16 percent to 21 million (http://www.plansponsor.com/HSA-Assets-Have-Grown-23-Percent-Over-the-Past-Year/">PlanSponsor). With such a marked rise in enrollment and interest in HSAs, this appears to be the one area where the two parties could find consensus to expand the utility of these accounts for a wider slate of Americans.
Bipartisan health reform on the horizon?
Despite the gridlocked nature that much of the Senate and House of Representatives processed in recent years, there is renewed hope for a bipartisan solution to correct some of the issues surrounding the Affordable Care Act. Several Democrats and Republicans have spoken out about their plans to work together on a bipartisan measure, and it appears they're staying true to their statements, reports CNN. Senator John McCain (R), who voted against the “Skinny Repeal" bill, has repeatedly said that the Senate should “hold hearings, receive input from both sides of the aisle, heed the recommendations of the nation's governors, and produce a bill that finally delivers affordable health care for the American people."
And they're moving forward in doing just that. Earlier this August, leaders of the Senate Health Committee said they would start in early September with bipartisan committee meetings aimed at stabilizing Obamacare's individual insurance market. Just this week, Senate leaders indicated that they will invite state governors and insurance commissioners for bipartisan meetings set to begin in early September.
Ohio Governor John Kasich (R) and Colorado Governor John Hickenlooper (D) have even announced that they have a proposal to stabilize Obamacare that could be unveiled in the next few weeks, according to The Hill. Their goal is to present the plan to the Senate Health Committee for consideration.The President recently agreed to continue healthcare subsidy payments for the time being, but the future is still unclear and Congress will need to move quickly on any bipartisan action. Insurers are still faced with the possibility of increasing premiums significantly in fear of what may happen with promised cost-sharing payments that could be withheld at any time.
If any new developments happen in the coming weeks and months, FSAstore.com will be here to cover it! Check back often for updates pertaining to consumer-directed healthcare so you can understand any major changes as they happen.
Flexible spending account (FSA) and health savings accounts (HSA) will see a number of important changes from the regulations set forth in the bill. These include:
- Repeal of the OTC Rx requirements for FSAs/HSAs:
The OTC Rx provision was originally included in the Affordable Care Act (ACA), and the Better Care Reconciliation Act will fully remove the provision for FSA and HSA users to obtain a prescription for OTC drugs. The proposed effective date is for expenses incurred after December 31, 2016.
- Repeal of the FSA maximum contribution:
As of 2017, FSA users could set aside up to $2,600 as single individuals and $5,400 for families to cover qualifying medical products and services during their current plan years. The Better Care Reconciliation Act would allow the plan sponsor to set whatever maximum they wish. The proposed effective date would be for plan years beginning after December 31, 2017.
- HSA yearly maximum contributions would increase:
HSA contribution limits have grown steadily in the past decade adjusted for inflation, growing from $3,050 for single individuals in 2010 to $3,400 for single individuals in 2017. The Better Care Reconciliation Act will almost double these limits for HSA users to $6,550 for single individuals and $13,100 for families. The effective date for qualified HSA contributions after December 31, 2017.
- HSA catch-up contributions expanded
When an HSA user reaches middle age, he/she is able to make a catch-up contribution (up to $1,000) to save in excess of the yearly contribution limit on an annual basis. The proposed legislation would keep these HSA catch-up contributions in place, but they would now be allowed for both spouses age 55 and up, as opposed to restricting contributions to the HSA holder alone.
- HSA tax penalties reduced
The Better Care Reconciliation Act also revamps the tax penalty for use of HSA funds on non-qualified expenses. Today, if an HSA user before the age of 65 withdraws HSA funds to cover non-qualifying expenses, he/she would be charged a 20 percent penalty on that amount. The Better Care Reconciliation Act would restore this tax to non-qualified HSA distributions to the pre-Affordable Care Act amount of 10%. Special rules that would allow some expenses incurred prior to the establishment of the HSA to be qualified as well.
- Further extension of the Cadillac Tax:
The Cadillac Tax is a 40% excise tax on the value of coverage exceeding set thresholds that was set to begin in 2020, which currently includes contributions to FSAs/HSAs. The tax was designed to be levied on only the most expensive employer-sponsored health insurance plans—the so-called Cadillacs of health coverage. This regulation was one of the more controversial aspects of the ACA, as while it is a tax on insurance companies, it was feared that these increased costs would be passed off onto employers, and eventually the employees themselves (IB Times, 2015). The Better Care Reconciliation Act would further delay implementation of the tax to taxable years after December 31, 2015.
The Senate is expected to fast track The Better Care Reconciliation Act for a vote before the July 4th holiday. The Congressional Budget Office (CBO), that rates proposed legislation to include potential cost and impact, has promised a score on the new bill early next week.The bill is expected to face challenges with four Senate Republicans currently voicing concern with the bill. In order for the bill to pass, no more than two Senate Republicans can vote against it, and Vice President Mike Pence would be the tie-breaking vote in the Senate if no majority prevails.
U.S. Capitol Building in Washington, D.C., USA
In a stunning turn of events for what has been an on-going topic of interest to many, on May 4th, 2017, the majority of the U.S. House of Representatives voted in favor of the American Health Care Act (AHCA) with a vote of 217 to 213. This officially advances it to the Senate for consideration. It is predicted to face an uphill battle in the Senate, where Republicans are hoping to get it passed through the budget reconciliation process.
The reconciliation process allows for a simple 51-vote majority to pass the Senate without the option of a Democratic filibuster. To get it passed under reconciliation however, according to the Committee for a Responsible Budget's explanation of the reconciliation process and what is known as the Byrd Rule, Republicans will need to prove that each aspect of the bill has a direct impact on the federal budget (among other requirements), which will be a difficult task.
Does the AHCA impact my FSA or HSA?
As the bill moves forward in the Senate, it is expected that it will face significant changes. However, in its current form, the AHCA features many provisions that would have impact to FSAs and HSAs, the biggest being:
- Repeal of the OTC Rx requirements for FSAs/HSAs that requires users to submit a prescription for over-the-counter products with a medical ingredient.
- Repeal of the FSA maximum contribution limit ($2,600 in 2017)
- HSA maximum contributions would increase to $6,550 for self only and $13,100 for family
- HSA catch-up contributions of $1,000 would be allowed for both spouses ages 55 and up. It is currently only allowed for the account-holder.
- Further delay of the Cadillac Tax to 2025 (it is currently set to begin in 2020)
What happens next?
The process to pass a healthcare bill is a long and tenuous one, as we saw withthe Affordable Care Act. President Obama first met with lawmakers and healthcare professionals to lay the groundwork for the bill in March 2009 and it wasn't until March 2010 that the ACA was finally signed into law. According to Politico, there are already rumblings that the Senate could produce its own version of the bill that would then be sent before the House of Representatives again, so there is likely a long road of committees and debate before a final piece of legislation reaches President Trump's desk.
At FSAstore.com/HSAstore.com, we will stay on top of any new developments so be sure to visit our blog often for the latest news on healthcare reform!
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