What Summer Items Can Employees Use their HSA and FSA Funds On?
While summer inspires thoughts of out-of-the-office messages and PTO, employees should also be thinking about their HSA and FSA funds. There are a lot of eligible everyday items and services that employees purchase that they can spend their FSA and HSA dollars on in the summer.
Reminder: What are FSAs and HSAs?
A health savings account (HSA) is a personal bank account with significant tax advantages that can be used by an individual to pay for medical expenses on high-deductible health insurance plans. A wide variety of banking institutions around the country offer these types of accounts to single users and families.
Meanwhile, flexible spending accounts (FSA) allow employees to set aside pre-taxed funds for healthcare or dependent care expenses. While there are restrictions on contributions for both types of accounts, there are three key differences between HSAs and FSAs:
- HSA funds roll over year to year, while FSAs tend to expire at the end of the calendar year (or at the end of the plan year), though there may be a carryover or grace period, depending on the plan. It’s important to note that this year is a little different after the passing of the 2021 Consolidated Appropriations Act (CAA), which allows employers to extend the grace period for FSAs and carry over unused funds from 2020. Read more about the CAA here.
- Employers and employees can contribute to HSAs and FSAs, but there are limits to what an employer can contribute to an FSA based on what an employee contributes.
- Unlike HSAs, you do not have to be a member of a high deductible health plan to contribute to an FSA.
Summer Items to Spend FSA and HSA Funds On
To help employees save money on everyday summer items, employers can remind them of this HSA and FSA-eligible list:
- Bandages: Usually, less time at school and work means more time outside. Oftentimes, longer days outside doing summer activities means some scrapes and cuts along the way. Bandages are always good to have on hand in the summer, so it’s even better that they’re FSA- and HSA-eligible.
- Sunscreen: Save money on sun protection this summer. Sunscreen over 30 SPF is considered a qualified medical expense, as well as lip balm with SPF 15+.Both standard sunscreen and sunscreen for children are eligible for FSA reimbursement, though not with DCFSA or LCFSA funds.
- Prescription Sunglasses: While it’s well-known that eyeglasses and readers are eligible for HSA and FSA spending, employees don’t always think about prescription sunglasses. Most of the time, insurance covers either prescription glasses or contacts, or a combination of both. But for people who also need prescription sunglasses, it’s good to keep HSA and FSA funds in mind. To be eligible for reimbursement, a prescription for sunglasses must be provided by an eye doctor.
- Over-the-Counter Medication: The Affordable Care Act (ACA) previously mandated that a doctor’s prescription was required to pay for over-the-counter medicine using HSA, FSA, and HRA funds. The CARES Act removed this provision, so employees with HSA and FSA funds can use them to pay for medicine like ibuprofen or allergy medication without a doctor’s prescription.
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