FSA & HSA

What are the differences?

As we near the end of the year, you may be wondering if the money you've been carefully putting into a health savings account (HSA) or flexible spending account (FSA) is in jeopardy. Some of these accounts have a "use it or lose it" aspect to them, requiring you to spend what you put into them before the calendar year is out.

If you have money sitting in your account, you may not be sure what to do with it. The good news is there are a lot of unexpected avenues for spending those unused funds, including vision care through Union Family Eye.

To help you decide how to use these dollars, here's a look at exactly how FSAs and HSAs work and what vision costs you can cover with them. While there are some differences between HSAs and FSAs when it comes to vision costs, the team at Clarkson Eyecare has broken it down for you below.

Differences Between HSA and FSA

FSA and Vision Costs

Like the name suggests, a flexible spending account, or FSA, offers a lot of flexibility. FSAs are pre-tax accounts for healthcare costs that an employer offers in conjunction with a workplace health insurance plan. Payments into the account are usually taken out of your paycheck. Your employer must offer the FSA, but you're not required to have health insurance to have an FSA.

You can use this money to pay for any eligible health expenses, including vision. This includes eye exams, glasses, prescription sunglasses, eye drops and contact lenses. Eye care accessories such as contact lens solution and cleaner are also eligible. You can even put FSA funds toward eye surgery such as LASIK, radial keratotomy and cataract surgery.

Our office provides a variety of eye care services, glasses, and contact lenses that can be purchased with your FSA.

FSA; Use it or Lose it

Once you determine how much you are contributing to an FSA, this amount is set for the year unless you undergo a major life change that may qualify you to adjust the figure. The maximum amount you can have in the FSA does not change even if you enroll other family members in it. For 2021, this contribution amount is $2,750 and may be less depending on your employer's policies.

Typically, with FSAs, if you don't use it, you do lose it! But new legislation introduced in 2021 makes it possible for some, or all, of the money to be rolled over to next year. The catch? It depends on your employer.

Usually, the maximum amount employers will let you carry over is just $550, with a 2.5-month grace period for spending any remaining money. However, some may not even offer that.

For this year only, employers have the option to extend that grace period through December 2022. They may also remove the $550 contribution limit cap and allow more excess funds to be carried over. Be sure to check your employer's policies, though, as not many companies have adopted these more generous rules.

Finally, if you switch jobs before the year's end, keep in mind that this is another situation where you may lose any FSA money you have not spent.

HSA and Vision

Meanwhile, a health savings account (HSA) has some similarities to an FSA, but also some key differences. Like FSAs, HSAs contain tax-free dollars that are set aside for eligible healthcare expenses.

HSA-eligible expenses include eye exams, screenings, glasses, contact lenses, prescription sunglasses and vision surgery from our office. It even includes lens perks like UV protection and multifocal and bifocal lenses, as well as contact lens solutions.

One big difference from an FSA is that in order to qualify for an HSA, you need to be a member of a high-deductible health plan (HDHP). While it does not matter what type of high-deductible health plan this is, you do have to meet some coverage benchmarks.

To qualify as an HDHP, a plan's minimum deductible must be $1,400 for individuals and $2,800 for families. The amount of the health tab that you are responsible for out of pocket can't be more than $7,000 as an individual and $14,000 as a family. In 2022, this will go up to $7,050 for individuals and $14,100 for families.

HSA: Use it or Lose it

Unlike an FSA, you can make changes to the amount you contribute to an HSA at any point in the year. You are also able to roll over any remaining funds to the next year if you choose. So, you will not lose your HSA funds if you don't use them.

If you change jobs, the money in the account comes with you, since an HSA is not offered through an employer but is instead managed directly by you. To make the most of these funds, be sure to account for them as part of your healthcare financing plans for this year and beyond.

Whether you have an FSA or an HSA plan, the money is yours to help you meet your health needs and pay for qualified medical expenses.

While some specifications of your health plans can vary based on your employer, our team works with you to answer any coverage questions, so you get the vision care you need. If you're not using an FSA or HSA to pay for vision care, Union Family Eye staff also answers any general insurance questions. For more specific insurance, plans, and coverage information, contact us at 704.821.5009