Health Spending Accounts
Health spending accounts can work for almost anyone. The key is knowing how they work. You can use these accounts for qualified medical expenses, such as deductibles and copays.
Health spending accounts can work for almost anyone. The key is knowing how they work. You can use these accounts for qualified medical expenses, such as deductibles and copays.
Health spending accounts are used to pay for qualified medical, prescription, dental and vision expenses. The three main types of plans are:
A health savings account, or HSA, is an account you use to pay for qualified medical, pharmacy, dental and vision expenses and save on taxes. They are paired with high-deductible health plans.
An HSA is an account to help you save for health care expenses. Instead of spending money on higher premiums, you can keep that money in an HSA to use on those expenses. The account is yours, and you'll never lose what you put in.
Compared to other health spending accounts, HSAs give you more ways to save on health care expenses, now and in the future.
According to recent estimates, a married couple retiring at age 65 will require approximately $280,000* throughout retirement to cover medical costs such as out-of-pocket prescription drug expenses and Medicare premiums. By saving money in an HSA you can prepare for your family's future health care costs and also use your HSA as a buffer to protect your other retirement accounts from out of pocket medical expenses.
* Source: Fidelity Investments, 2018
You must be covered by a high-deductible health plan to open an HSA. You can’t open an HSA if you’re:
If you're generally healthy and you want to save for future health care expenses, an HSA may be an attractive choice. Or if you're near retirement, an HSA may make sense because the money can be used to offset the costs of medical care after retirement.
If you think you might need expensive medical care in the next year and would find it hard to afford a high deductible, an HSA and high-deductible health plan might not be your best option.
You can contribute to your HSA any time of the year, up to the annual limit.
Ways to contribute include:
Publication 969 from the IRS will give you more information about making contributions.
Depending on how your account is set up, you pay for qualified expenses:
The IRS defines qualified expenses. Publication 502 has the complete list.
Members with an HSA can access it through their online member account or with our mobile app.
Resources to help HSA members get the most from their accounts
An HRA, or health reimbursement arrangement, is a kind of health spending account provided and owned by an employer. The money in it pays for qualified expenses, like medical, pharmacy, dental and vision, as determined by the employer.
Here are other things to note about an HRA:
Employees who get health insurance through employers who offer an HRA
You don’t pay taxes on money that comes from an HRA
You may be able to use your HRA to pay for many medical expenses not covered by your health insurance.
You’ll find out what kind of HRA is available and how much your employer puts in it during open enrollment, or when you join the company. If you don't sign up for the HRA at that time, then you'll have to wait until the next open enrollment.
The payment process for most Blue Cross members who have an HRA is easy. When you get care, we get the bill and use funds from the HRA to pay. You'll see the payment listed on your explanation of benefits, or EOB, as well as your member account.
Blue Cross members with an HRA can manage their funds through their online member account or with our mobile app.
A flexible spending account, or FSA, is an account you use to save on taxes and pay for qualified expenses. What makes them flexible? They give employers the most options when deciding on what spending accounts to offer. Other key things to know about FSAs are:
Employees who get health insurance through employers who offer an FSA
There are three kinds of FSAs. Your employer decides which types are available.
Also called a medical FSA, you use it to pay for qualified medical, pharmacy, dental and vision expenses as defined in Publication 502 from the IRS.
Sometimes, employers offer an account called a post-deductible health FSA. It means you must meet your plan’s deductible before using the funds in your FSA.
If you have an HSA, you may also have a post-deductible FSA. Why have both accounts?
You can use the money in this FSA to pay qualified expenses for dependents so:
Dependents are defined as children under age 13 and adults who can’t mentally or physically care for themselves.
Qualified expenses are defined by Publication 503 from the IRS. They include day care, elder care, preschool and day camp.
If you have an HSA, you may also have this kind of FSA. You use it to pay for qualified dental and vision expenses as defined in Publication 502 from the IRS.
Why have both accounts?
You usually sign up for an FSA once a year during open enrollment. That’s when you:
A portion of that amount is then taken out of your paycheck before taxes throughout the year and put in your FSA.
Funds left over at the end of the year go back to your employer, although they can choose to:
You pay for qualified expenses using:
When you have a health or limited-purpose FSA, the total amount is available on the first day. For example, if your employer put in $300, and you decided to contribute $600, you have $900 to spend right away. You pay the $600 over the course of the year.
When you have a dependent care FSA, you can only access your account balance. If your employer put in $300, that’s all you have on the first day.
Blue Cross members with a HealthEquity® FSA can manage their funds through their member account.
A health savings account, or HSA, is an account you use to pay for qualified medical, pharmacy, dental and vision expenses and save on taxes. They are paired with high-deductible health plans.
An HSA is an account to help you save for health care expenses. Instead of spending money on higher premiums, you can keep that money in an HSA to use on those expenses. The account is yours, and you'll never lose what you put in.
Compared to other health spending accounts, HSAs give you more ways to save on health care expenses, now and in the future.
According to recent estimates, a married couple retiring at age 65 will require approximately $280,000* throughout retirement to cover medical costs such as out-of-pocket prescription drug expenses and Medicare premiums. By saving money in an HSA you can prepare for your family's future health care costs and also use your HSA as a buffer to protect your other retirement accounts from out of pocket medical expenses.
* Source: Fidelity Investments, 2018
You must be covered by a high-deductible health plan to open an HSA. You can’t open an HSA if you’re:
If you're generally healthy and you want to save for future health care expenses, an HSA may be an attractive choice. Or if you're near retirement, an HSA may make sense because the money can be used to offset the costs of medical care after retirement.
If you think you might need expensive medical care in the next year and would find it hard to afford a high deductible, an HSA and high-deductible health plan might not be your best option.
You can contribute to your HSA any time of the year, up to the annual limit.
Ways to contribute include:
Publication 969 from the IRS will give you more information about making contributions.
Depending on how your account is set up, you pay for qualified expenses:
The IRS defines qualified expenses. Publication 502 has the complete list.
Members with an HSA can access it through their online member account or with our mobile app.
Resources to help HSA members get the most from their accounts
An HRA, or health reimbursement arrangement, is a kind of health spending account provided and owned by an employer. The money in it pays for qualified expenses, like medical, pharmacy, dental and vision, as determined by the employer.
Here are other things to note about an HRA:
Employees who get health insurance through employers who offer an HRA
You don’t pay taxes on money that comes from an HRA
You may be able to use your HRA to pay for many medical expenses not covered by your health insurance.
You’ll find out what kind of HRA is available and how much your employer puts in it during open enrollment, or when you join the company. If you don't sign up for the HRA at that time, then you'll have to wait until the next open enrollment.
The payment process for most Blue Cross members who have an HRA is easy. When you get care, we get the bill and use funds from the HRA to pay. You'll see the payment listed on your explanation of benefits, or EOB, as well as your member account.
Blue Cross members with an HRA can manage their funds through their online member account or with our mobile app.
A flexible spending account, or FSA, is an account you use to save on taxes and pay for qualified expenses. What makes them flexible? They give employers the most options when deciding on what spending accounts to offer. Other key things to know about FSAs are:
Employees who get health insurance through employers who offer an FSA
There are three kinds of FSAs. Your employer decides which types are available.
Also called a medical FSA, you use it to pay for qualified medical, pharmacy, dental and vision expenses as defined in Publication 502 from the IRS.
Sometimes, employers offer an account called a post-deductible health FSA. It means you must meet your plan’s deductible before using the funds in your FSA.
If you have an HSA, you may also have a post-deductible FSA. Why have both accounts?
You can use the money in this FSA to pay qualified expenses for dependents so:
Dependents are defined as children under age 13 and adults who can’t mentally or physically care for themselves.
Qualified expenses are defined by Publication 503 from the IRS. They include day care, elder care, preschool and day camp.
If you have an HSA, you may also have this kind of FSA. You use it to pay for qualified dental and vision expenses as defined in Publication 502 from the IRS.
Why have both accounts?
You usually sign up for an FSA once a year during open enrollment. That’s when you:
A portion of that amount is then taken out of your paycheck before taxes throughout the year and put in your FSA.
Funds left over at the end of the year go back to your employer, although they can choose to:
You pay for qualified expenses using:
When you have a health or limited-purpose FSA, the total amount is available on the first day. For example, if your employer put in $300, and you decided to contribute $600, you have $900 to spend right away. You pay the $600 over the course of the year.
When you have a dependent care FSA, you can only access your account balance. If your employer put in $300, that’s all you have on the first day.
Blue Cross members with a HealthEquity® FSA can manage their funds through their member account.
