HSA & FSA Eligibility: What They Are and How to Use Them
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HSA & FSA Eligibility: What They Are and How to Use Them

With the spread of COVID-19 and the Delta variant in particular, the IRS has recently made face masks HSA/FSA-eligible. That means you can use your health savings account (HSA) or flexible spending account (FSA) to purchase OURA masks or mask accessories with your pretax dollars! Simply proceed to checkout and enter your HSA/FSA card information in the payment section—if you’re having issues checking out, contact our support team here!

If you’re not sure if you qualify for a HSA/FSA or how to use these accounts, we’ve put together a brief guide to help you better understand the ins and outs of health spending accounts.

What are Health Spending Accounts?

HSA stands for health savings account and FSA stands for flexible spending account (or flexible spending arrangement, as referred to by the IRS). These accounts let you set aside some of your pre-tax dollars (money that is withheld from your paycheck before taxes are calculated) to pay for your healthcare and medical costs. If you qualify for an HSA you generally are not allowed to set up an FSA at the same time.

How Does HSA/FSA Work?

HSAs

You can think of an HSA as a sort of “health 401K”, in that the savings you put in it rolls over every year with interest, and you can sometimes have the option of investing your funds. Generally, these account types will require you to have an active health insurance plan—the money that’s set aside can be used to pay for what the IRS considers “qualified medical expenses”, which include but are not limited to copays, coinsurance, deductibles, and prescription costs. Payments can also be made at an HSA store that carries IRS-approved medical supplies.

FSAs

Typically, you decide how much money you want to put into your FSA when you receive it and your benefits from your employer. There will be deductions from your paycheck made to cover that amount. These spending accounts differ from HSAs in that whatever money you put into your account but don’t spend is lost at the end of the year. Exceptions are if your employer has your FSA set up with a rollover option, which limits the rollover amount to $500. With FSAs, you cannot invest any of the account funds nor do you need your medical plan’s deductible to meet the minimum amount set by the government. The expenses you can spend on are the same as with HSAs, and you can purchase medical supplies and PPE at an approved FSA-store. There are also limited purpose FSAs, which are essentially FSAs that can only be used for your vision and dental expenses.

How Do I Get an HSA/FSA?

HSAs

While they are labeled as savings accounts, HSAs are only available to people who have high deductible health plans (HDHPs). Every year, the government determines the minimum deductible amount that qualifies a plan as an HDHP and the maximum amount an individual can contribute to their HSA. You can view this year’s minimum and maximum amounts here. If you want an HSA, your HDHP must be your sole insurance plan, you cannot be claimed as a dependent on anyone else’s tax returns, and you cannot be Medicare eligible. It’s always best to check with an insurance company before deciding to purchase a plan with a high deductible, as not all of them are HSA-eligible.

FSAs

FSAs are only offered through your employer, generally as part of your benefits package. As a result, you’re unable to acquire one on your own. You’ll also lose your FSA if you happen to change jobs, and if you leave your employer before the funds you’ve spent from your FSA have been matched by your paycheck deductions you will likely have to pay them back. If you qualify for an HSA but are interested in a limited purpose FSA, make sure you speak with a company HR representative or benefits administrator.