Written on November 18, 2022 by Theresa Vuskovich, DMD. To give you technically accurate, evidence-based information, content published on the Everlywell blog is reviewed by credentialed professionals with expertise in medical and bioscience fields.
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When you shop online with Everlywell, you may have noticed the statement "FSA/HSA accepted." Which products are covered by FSA and HSAs? In this article, learn how FSAs and HSAs can save you money on essential healthcare services and products.
A Flexible Spending Account (FSA) allows employees to save money on healthcare and medical products [1]. FSA contributions are tax-exempt, meaning you get to keep more of what you earn. You must decide how much you will contribute at the beginning of the plan year [1].
Once you decide how much you will contribute, your employer will deduct untaxed funds from your paycheck for your FSA. You can then use this untaxed money to purchase FSA-eligible products and services.
In 2021, salary contributions to an FSA cannot exceed $2,750 [2]. Starting in 2023, employees can contribute up to $3,050 to their FSA [3]. Any funds not used by the end of your plan year are lost unless you have a grace period or rollover option in your plan.
Employees enrolled in a high-deductible health plan (HDHP) can enroll in an HSA. You can enroll in an FSA through your employer. FSAs are not available to self-employed individuals.
FSAs offer the following benefits: employer contributions are exempt from gross income, contributions are not taxed, qualified medical expenses are reimbursed tax-free, and FSA funds are available at any time, even if you have not deposited the funds [1].
A Health Savings Account (HSA) is a personal savings account for paying healthcare expenses. Tax-free withdrawals are available for qualified medical costs, such as deductibles, copayments, and coinsurance. You can contribute to an HSA if you have a high-deductible health plan (HDHP) [2].
Individuals enrolled in high-deductible health plans (HDHP) can open an HSA [1]. Banks, insurance companies, and other financial institutions offer HSAs. Medicare members cannot enroll in an HSA [2]. You can enroll in an HSA if you are self-employed.
HSAs are owned by individuals and allow contributions to roll over, while employers own FSAs. You cannot have both an HSA and an FSA [2].
You can use your tax-exempt HSA to pay your HDHP's deductible [1]. HSA balances roll over from year to year so that you can accumulate savings for future healthcare expenses. This is one of the significant differences between HSAs and FSAs. Generally, funds are not carried over into the following year in FSAs.
Healthcare costs have become a burden for many families, but by opening an FSA or HSA, you can significantly reduce your healthcare expenses. HSAs and FSAs cover a wide range of healthcare services. Eligible services include: [4]
The Internal Revenue Service (IRS) determines which products and services are FSA/HSA eligible [1]. Many of these healthcare services are very expensive, making the ability to pay with tax-exempt funds through FSAs and HSAs a considerable benefit.
When you use FSA/HSA tax-exempt dollars, you can buy FSA/HSA-eligible products at stores accepting these saving programs. Everlywell accepts both FSA and HSA. Some FSA/HSA-eligible products include: [4]
The FSA HSA saving programs do not cover vitamins, supplements, or personal items like toothpaste. Providers can write letters of medical necessity (LMN) if they determine an FSA and HSA ineligible service or product is medically necessary [5]. The IRS requires a provider letter verifying the expense for diagnosing, treating, or preventing a disease or condition.
The benefits of an HSA and FSA are easy to see! You can save money on services and products you use daily to maintain a healthy lifestyle. Remember to use your FSA funds before the end of the year since funds do not carry over into the following year. Check out Everlywell's products page to find FSA and HSA-eligible items.
You can also find a complete list of FSA and HSA products here.
FSA vs. HSA: what are the differences?
Are Everlywell tests covered by FSA/HSA?
The Ultimate FSA/HSA Shopping Guide: HSA/FSA Eligible Expenses for 2022
Adulting 101: Healthcare Basics
References
1. Publication 969 (2021), health savings accounts, and other tax-favored health plans. IRS.gov. URL. Accessed November 16, 2022.
2. Internal Revenue Service provides tax inflation adjustments for tax year 2023. IRS.gov. URL. Accessed November 17, 2022.
3. Internal Revenue Service provides tax inflation adjustments for tax year 2023. IRS.gov. URL. Accessed November 17, 2022.
4. Publication 502 (2021), medical and dental expenses. IRS.gov. URL. Accessed November 17, 2022.
5. Medically necessary. Healthcare.gov. URL. Accessed November 17, 2022.