Few people are thinking about their Health Savings or Flexible Spending Accounts during the holidays. The sheer merriment of good food and family gatherings has us all distracted. But there are a few things, however, to keep in mind before the start of a new year.
The gift of health should be something to consider and, depending on which program you’ve bought into, time is ticking. It’s a panic that sets in at some point. The use it or lose it rule.
A majority of Flexible Spending Accounts require account holders to use their funds prior to the new year. However, with the introduction of Health Savings Accounts, people are now able to roll over their pre-tax health funds. Yet almost half of Americans believe they still lose those monies, according to the Administration of Health Care Agencies.
Account holders should always double check with their human resources representative to be sure they know all the details of their accounts, but here are a few tips:
• When possible, account owners should make the maximum annual contribution to optimize their tax savings. Don’t forget about the ability to rollover unused funds each year with most programs.
• An HSA is portable, meaning it’s yours whether you stay with your current employer or not.
• Monies will continue to roll over year after year, and those balances do have the ability to earn interest or be invested.
• Contribution limits for pre-tax accounts are determined by the Internal Revenue Service.
• You can make adjustments to your account throughout the year. Just be advised by a professional to ensure you are making the correct changes from family, single or other classifications.