Flexible Spending Accounts and Health Savings Accounts

Your key to maximizing savings and minimizing tax liabilities effortlessly.

Flexible Spending Account and Dependent Care FSA

A Flexible Spending Account (FSA) allows you to set aside tax-free funds to pay for eligible healthcare expenses. A Dependent Care FSA allows you to save tax-free funds for eligible child and elder care expenses. Both accounts are subject to IRS contribution maximums and the full amount of funds must be used or you risk losing them.

The max FSA contribution amount is $3,300. The max amount for Dependent Care FSA is $5,000. FSA funds can only be used in the current plan year (Example: You can’t use your funds from this year to pay for a claim in 2023.) NOTE: You must re-enroll each year in order to participate in the FSAs.

Health Savings Account (HSA)

Health Savings Accounts are savings accounts that allow you to set aside tax-free funds each paycheck toward eligible healthcare expenses. The HSA is yours to keep forever, so the funds stay with you even if you leave MCC.

HSA funds can be used to pay for eligible expenses today or can be saved for future expenses. Any unused funds rollover year after year. Plus, you can choose how much money is deducted from your paycheck to fund your HSA.

HSA Eligibility

To be eligible to enroll in the HSA you MUST be enrolled in the High Deductible Health Plan (HDHP).

HSA Contribution Limits

  • Employee Only: $4,300
  • Family: $8,550
  • Catch-up Contribution (ages 55+): $1,000

Resources

Maximizing Your FSA

Below are six essential tips to maximizing your FSA.

Understand Eligible Expenses

Know what expenses qualify for FSA reimbursement, such as co-pays, prescription medications, medical devices, and some over-the-counter items. Check the IRS’ list for specifics.

Plan Your Contributions Wisely

Estimate your annual healthcare expenses to determine your contributions. Avoid over-contributing to prevent forfeiting unused funds due to the “use-it-or-lose-it” policy.

Keep Track of Deadlines & Save Your Receipts

Be aware of your plan’s deadlines for incurring expenses and submitting claims. Retain receipts and documentation for all FSA-eligible purchases to substantiate claims and avoid reimbursement issues.

Monitor Account Balance Regularly

Keep an eye on your FSA balance throughout the year to ensure efficient use of funds and avoid last-minute spending.

Understand Reimbursement Process

Familiarize yourself with the reimbursement process (see section above), including how to submit claims, required documentation, and typical turnaround times.

Educate Yourself on Special Circumstances

Be aware of events like employment or family status changes that might affect your FSA. Understand how these can impact your contribution limits and eligibility for certain expenses.

Maximizing Your HSA

Below are six essential tips to maximizing your HSA.

Maximize Contributions

Contribute the maximum allowed amount to your HSA each year to take full advantage of its tax benefits.

Shop Around

Compare prices for medical services and prescriptions to get the best value for your HSA dollars.

Invest Wisely

Once your HSA balance reaches a certain threshold, consider investing a portion of it in mutual funds or other investment options offered by UMB. This can help your funds grow over time.

Track Expenses

Keep thorough records of all medical expenses paid from your HSA, including receipts and explanations of benefits (EOB) statements. This ensures you can easily reimburse yourself for qualified expenses and avoid penalties.

Stay Healthy

Invest in preventive care to avoid costly medical bills down the road. Many preventive services are covered by HDHPs without requiring you to meet your deductible.

Plan for the Future

Treat your HSA as a long-term savings vehicle for healthcare expenses. Consider how you can strategically use it in retirement, as funds can be withdrawn penalty-free for non-medical expenses after age 65 (though income tax will apply).

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