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How to Set Yourself Up for Success with your Health Spending Account in a New Plan Year

The new year is a time of fresh starts, resolutions, and excitement for the year to come. When you’re looking ahead, it might be good to consider what you can do with your health spending accounts.

Many types of accounts, such as health savings accounts (HSAs) or flexible spending accounts (FSAs) can receive lump sums from employers at the start of the year. That means you can think about what you want to do this year, see what types of expenses are eligible for your accounts, and plan accordingly.

Keep in mind that you will start over paying toward your deductible. That means even if you met your deductible last year and started enjoying the benefits of insurance paying for almost all of your expenses, you’ll start having to pay toward your deductible again in the new year. This is where your spending account will come in handy, because using your spending accounts – even if they’re funded by employer contributions - to pay your medical expenses count as paying toward your deductible.

Even if you haven’t met your deductible, preventative visits with your doctor are often completely covered by many health insurance plans. You can check with your plan and schedule a routine check-up that won’t cost you anything, which will also help you keep money in your spending account.

Of course, you can use your spending accounts to pay for other doctors visits and prescriptions, so it’s helpful to make sure you have money in your account to handle those things, but what many people don’t realize is that you can also use your spending account to help you pay for all sorts of everyday expenses, including:

  • Arch supports, cotton balls, band-aids and bandages
  • Asthma treatments and hearing aids
  • Cold/hot packs and thermometers
  • Prescription eyeglasses, contact lenses and their cleaners
  • Pregnancy test kits and prenatal vitamins
  • Sunscreen that’s SPF 30 or greater
  • And much more

You can view the entire list of eligible expenses here.

It’s important to know that you don’t have to wait for payroll deductions to use FSAs and HSAs. With an FSA, even though your account is funded by routine payroll deductions, the amount you elected to contribute for the year is available to you at the beginning of the year. If you need to use funds to pay for something early on, you can do that and your deductions for the rest of the year will just go toward fulfilling the annual election.

If your spending account is an HSA, you can make your own tax-free contributions in addition to payroll deductions at any time. If something comes up that you could use your HSA funds to pay for, but your HSA doesn’t have enough to cover it, you can make a deposit so you can still use your tax-free money to make the payment. If you receive some sort of lump sum toward the beginning of the year like a tax refund or a bonus from work, it might be worth considering putting some of that money in your HSA for potential needs.

If you make a special contribution to your HSA but end up not needing it, it’s fine. Your HSA funds will stay in your account as long as you keep them there. Unfortunately, FSAs don’t work the same way. FSA funds won’t rollover more than $500 into the next year – and you’ll need to confirm with your company that your plan is set up for that. As a result, you may want to be aware of ways to use your FSA funds if you have money left over toward the end of the year. We recommend going through the list of eligible expenses and find out how you can best use the funds in your account throughout the year.

Plan to take advantage of the full benefits of your account. Remember that this is money set aside to help you, so don’t miss an opportunity to help yourself out!

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