The start of the year is often a natural time to look over your expenses from the prior year and create a budget for the year to come. As we have talked about many times, as the healthcare market in the United States continues to change, grow and evolve, we are always encouraging our patients and clients to be smart consumers when it comes to their healthcare. Due to rising deductibles, co-pays, and co-insurances, more and more of your annual healthcare costs will be your responsibility. The days of walking into a medical office and handing someone your insurance card and expecting to have no out-of-pocket costs are long gone. Thankfully there are many options to help you manage these costs and using them wisely can help save you money for years to come.
Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) have been around for sometime now, but have gained popularity over the last few years, as insurance plans have changed. They do have their differences so it’s important to know which is right for you, and to make sure that you use them wisely.
Health Savings Accounts can only be used by individuals or families that have High Deductible Health Plans. Those plans often make people worried because of the possibility of needing to pay the higher deductible on any health related expenses, however, when combined with a HSA you can take advantage of the lower premiums and ability to save money in the HSA tax free. The money you put into the account goes in pre-tax, and the money in the account can grow tax free.
Any money that you place into your HSA that you don’t spend on medical expenses you can keep in that account and let it grow tax free for use in retirement. The money is also there over time, so if you have very few expenses this year, and more next year, the money will be there when you need it.
At this time the government does limit how much you can put into your HSA, you get $3,450 per individual and $6,900 for families. If you are over 55 you get to add an extra $1,000 to make it $4,450 or $8,900 (if two people are over 55).
Flexible Spending Accounts are a little different, they do not need to be linked to any specific kind of health insurance account and can be used by anyone. They are usually something that is offered by your employer as part of your employee benefits package. With an FSA, like an HSA the money that goes in is put in before tax, however, with an FSA whatever you don’t spend you lose at the end of the year. Another thing to consider with an FSA is that if you change employers you may or may not be able to keep your FSA money.
At this time FSA’s are limited to each employee putting in a maximum of $2,650.
Both HSA and FSA’s are restricted to what are known as eligible health expenses, this means they can be used for copays, deductibles, prescription drugs, some over the counter medications, and providers that do not participate with your insurance plan.
Budgeting for physical therapy in your HSA and/or FSA can be a huge savings. Short of the money going away at the end of the year (in the FSA), that is your money to spend, and you should be spending it wisely. Especially if you find yourself with an HSA that could allow you to roll the money over for the long term. Regular physical therapy visits can help reduce risk of injury and improve overall health and activity. The healthier you are the more of those precious dollars you get to save!