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How to spend your FSA money before it expires at the end of the year

Sarah Gantz, The Philadelphia Inquirer on

Published in Fashion Daily News

A fitness tracker, gym membership, ergonomic chair, an air conditioner — if you didn't know your FSA or HSA may cover these items, you may not be getting the biggest bang for your buck out of these popular health care savings accounts.

Flexible Spending Accounts and Health Savings Accounts both allow people to squirrel away pretax money to spend on eligible health care expenses.

Some key differences: While HSAs allow you to carry over any unused contributions into the next year, the balance in health FSAs often expires at the end of the year. Any money unspent in FSAs may be lost.

As the end of the year approaches, now is the time to review your accounts and spend down balances that won't roll over.

"Inflation is doing a number on us, and if there's something we can do to save on health care, that's important," said Divya Sangameshwar, insurance expert at Value Penguin, a consumer finance website.

Here's what to know about these plans and how to get the most out of them:

 

What is an HSA?

An HSA is a pretax savings account in which the balance rolls over from one year to the next. Only people with high-deductible health plans (a plan with a deductible of at least $1,400 for individual coverage) are eligible for HSAs.

These accounts can help pay for qualified health expenses, including co-pays, prescription drugs, medical equipment, and over-the-counter medication.

In 2022, you can stash up to $3,650 in an HSA if you have an individual plan and up to $7,300 for a family plan. Any money you don't use will carry over to the next. You own your HSA, which means it stays with you if you change jobs.

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