PBMs Feeling the Heat on All Fronts
May 23, 20232024 HSA Contribution Limits, HDHP Minimums, Maximums Set
June 8, 2023
Employers offer flexible savings accounts and health savings accounts to their employees so they can build up funds with pre-tax dollars to pay for health care and related expenses.
For the most part, people use their funds in FSAs and HSAs to reimburse themselves for out-of-pocket costs like copays, health insurance deductibles and the cost of prescription medications.
Unfortunately, many people don’t take full advantage of their FSAs and HSAs — and they could be getting reimbursed for a number of items they already are purchasing.
But while funds in an HSA roll over each year, the funds in an FSA must usually be spent by the end of the year, unless the employer allows its staff to carry over a certain amount to the following year.
Employers can offer one of two options to give their employees more time to spend their funds:
Grace period — You can provide an extra 2.5 months each year to spend the money in their flex accounts, which in most cases means until March 15 of the following year. In essence, they get 14.5 months to spend the funds. Whatever they don’t spend goes back to you, the employer.
Carry over — This allows your employees to keep some of the unspent money in an FSA from one year to the next.
In 2023, the maximum an employee can carry over is $610. This means that if they have money left in their FSA at the end of the plan year in 2023, they can keep up to $610 of it. If they have more than that at the end of the year, the rest goes back to you.
As a result, while employees with HSAs are not pressured to spend funds in their accounts every year, those with FSAs are. According to the Employee Benefit Research Institute, 48% of workers forfeited an average of $408 of their FSA funds in 2020.
Both FSAs and HSAs have the same rules for what they will cover.
However, employees often are unaware of the myriad of goods and services they can spend their funds on. To help your staff, you can educate them about these goods and services, and often the companies that host these accounts will provide a list of them. Typically, an expense is eligible if it mitigates, treats or prevents a specific disease or ailment from affecting the body.
These expenses are eligible too
You may also want to let them know about these 16 surprising eligible expenses:
- Over-the-counter medicines — Anything from cough syrup and pain relievers to allergy medications and eyedrops.
- Menstrual hygiene products
- A fitness program if the person is suffering from a health issue like diabetes, hypertension or obesity.
- Thermometers
- Heating pads
- Travel expenses to receive care
- Massages if they are for relieving pain
- Sunscreen with an SPF of 30 or higher
- Insect repellent
- Tobacco cessation programs
- Genetic health tests (like 23andme).
- Vitamins and supplements
- Sleep deprivation treatment and medication
- Breast pumps
- Birth control devices (condoms, pills, etc.)
- Baby monitors.
