6 things to know when enrolling in health benefits: FSA Store® and HSA Store® share tips to demystify tax-free healthcare accounts

Online retailer offers free calculators, personal assessment tools, a searchable eligibility list, and account education to help millions of consumers choose and use flexible spending accounts (FSAs) and health savings accounts (HSAs) 

DALLAS (September 16, 2024) – As back-to-school kicks off across the country, American workers will be getting an education of their own as the annual health benefits open enrollment period heats up. Open enrollment is an often-overlooked, yet crucially important process whereby individuals and families enroll in the benefits that will protect their health and finances in the coming year. Flexible spending accounts (FSAs) and health savings accounts (HSAs) have long been an important part of this equation, and to help consumers understand their options, FSA Store® and HSA Store®  is offering access to free, online tools and sharing these six things all employees should know about these accounts. 

1. How is an FSA different from an HSA? FSAs and HSAs are tax-advantaged accounts that allow users to set aside pre-tax income to pay for eligible healthcare and everyday wellness expenses (as determined by the Internal Revenue Service). An FSA is an employer-owned account that has an annual spending deadline, while an HSA is owned by an individual. The money in an HSA never expires, and accrues tax-free over time and can be used to pay for qualified expenses in retirement. 
   

2. How and when can someone enroll? An FSA, if offered by an employer as part of their benefits package, can be opened during the benefits enrollment period or if there is a qualifying event to allow a mid-year election. Because FSAs are employer-owned, any money contributed to the account remains with the employer in the event that an employee leaves their job for any reason (with the exception of any COBRA extension, if applicable). An HSA, on the other hand, can be opened at any time either through an employer’s benefit program or individually directly with an HSA administrator or custodian, as long as the person or family covered by the account is eligible to contribute and enrolled in a qualified high-deductible health plan (HDHP). 
   

3. How much can be contributed? The 2024 FSA employee contribution limit is up to $3,200. While 2025 FSA limits have not yet been announced, Mercer is predicting a more than 5% increase to $3,300. Both employees and employers can contribute to an FSA or an HSA. Employee FSA contributions are made with pre-tax payroll contributions, but employers can also make contributions to the employee FSA that exceed the employee contribution maximum. The total FSA contribution amount for the year is available on the first day of the plan year.  For 2025, the HSA contribution limit is $4,300 for individuals with self-only HDHP coverage (up from $4,150 in 2024), and $8,550 for individuals with family HDHP coverage (up from $8,300 in 2024). The total amount of employer and employee contributions cannot surpass these amounts. HSA contributions are also tax free, and can be made via automatic payroll contributions or via post-tax contributions throughout the year that can be taken as an above-the-line deduction at tax time.
   

4. Is there a spending deadline? There are no deadlines for when HSA funds must be spent. In fact, unused HSA funds roll over from year to year and always belong to the account holder. An FSA, on the other hand, does have an annual spending deadline or a time by which the balance must be spent or remaining funds are lost. For most people, the FSA deadline is Dec. 31 each year; however, this deadline can vary based on an organization’s plan year. An employer may also offer an FSA deadline extension, such as the allowance of a partial rollover of unused funds, a grace period (2.5 months after your plan year end date; typically March 15), and/or a claims run-out period (up to 3 months following the last day of the plan year to submit for reimbursement of expenses incurred during the plan year). To help account holders avoid potential FSA forfeitures, FSA Store offers free FSA resources to help account holders manage their account and their personal deadline so they won’t lose FSA funds.
   

5. How can FSA and HSA funds be used? The list of qualified expenses for FSAs and HSAs goes well beyond doctor visits and copays. Thanks in part to advocacy efforts from Health-E Commerce (parent brand to FSA Store and HSA Store) and other industry leaders, eligibility has continued to expand to include everyday items like over-the-counter medications, contacts and eyeglasses, hearing aids, menstrual care products, drug-free pain relief, and even high-tech health monitoring and diagnostic devices. Health-E Commerce has also launched a growing category of FSA- and HSA-eligible telehealth services, to make accessing care and savings even easier. It’s important to review a comprehensive FSA and HSA eligibility list to understand how these tax-free funds can be used in conjunction with health plan coverage to maximize the health, wellness, and financial wellbeing for individuals and families throughout the coming year.
   

6. How much can I save? Both FSAs and HSAs can help users save an estimated 30% (or $30 on every $100) on eligible healthcare expenses, depending on an individual’s tax bracket. Proprietary consumer insights from Health-E Commerce indicate that consumers spend an average of $1,600 a year on over-the-counter medical items that could be purchased with tax-free FSA or HSA funds.  A key savings differentiator is that HSAs allow users to invest a portion of those contributions into stocks, bonds, and mutual funds for retirement. HSAs also offer a unique triple tax advantage — contributions are tax-free (either through payroll deduction or as an above-the-line deduction at tax time), interest grows tax-free, and distributions for qualified medical expenses are also tax-free. 

To help individuals plan their contributions and estimate their savings potential, Health-E Commerce offers a free FSA calculator, along with HSA calculators that illustrate tax savings potential and future value of the account. Consumers who are considering an HSA for next year, can use the free HSA Your Way tool at HSA Store to explore the different ways an HSA can be used to support their lifestyle and wellness needs.

For additional information and tools, visit the HSA Store or FSA Store Learning Centers. 

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It’s open enrollment; that time of the year when workers have the opportunity to select benefits that support their future healthcare and financial needs. For employers and HR professionals, this is the ideal time to remind your team of benefits like flexible spending accounts (FSA) and health savings accounts (HSA) that can support their needs, and to answer common questions that often serve as roadblocks to participation and utilization. That’s why Health-E Commerce recently shared these open enrollment tips about FSAs and HSAs.

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About Health-E Commerce

Health-E Commerce is the parent brand to FSA Store and HSA Store, online stores that serve the 70+ million consumers enrolled in pre-tax health and wellness accounts. The company also created Caring Mill™, a popular private-label line of health products through which a portion of every purchase is donated to the Children’s Health Fund. Since 2010, the Health-E Commerce brands have led the direct-to-consumer e-commerce market for exclusively pre-tax health and wellness benefits. Health-E Commerce plays an essential role in expanding product eligibility for important new categories within the list of eligible medical expenses.