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Health care costs can cause a lot of stress. Numerous reports have said that 1 in 3 Americans are currently worried about health care expenses. As an employer, you may become concerned about lowered employee morale or an increase in the number of employees needing time off to deal with that stress. That is why you should invest in a Health Savings Account (HSA) or Flexible Spending Account (FSA) option for your employees. HSAs and FSAs are pre tax government programs that help incentivize saving for health care expenses. HSAs can be obtained through an employer, insurance company, or bank but an FSA is only offered by an employer. Companies can help employees by making a contribution to their HSA or FSA account. Employer contributions are not counted as part of the employee’s gross income and HSAs can even earn interest on the account balance! Not only can you help employees pay for medical supplies to prevent injury, but employer contributions to a FSA or HSA can be advertised as a wonderful addition to the company’s total benefits package.

Everyone qualifies for an FSA account if their employer offers them, even if they don’t have health insurance (investopedia). However, to qualify for an HSA an individual would have to elect a high deductible health plan. They also can’t be claimed as a dependent for tax purposes. According to the HSA Store you can use your funds (some require a doctor’s note) for the following (the complete list can be found here https://hsastore.com/HSA-Eligibility-List.aspx): :

  • Copays
  • Medical bills not covered by insurance
  • Prescription drugs
  • Dental expenses
  • Vision expenses
  • Psychological counseling
  • Tobacco cessation programs
  • Weight loss programs
  • Physical therapy
  • Chiropractor visits
  • Hearing aids
  • Breast pumps
  • Acupuncture
  • Service dogs
  • Medical alert bracelets
  • Birth control options including condoms
  • Fertility treatment
  • Feminine care products
  • Some over-the-counter medicines

Some things that are not covered include:

  • Some types of vitamins
  • Cosmetic surgery
  • Toiletries
  • Gym memberships

There are stores online that make it easy to spend your HSA or FSA money because they only offer eligible medical supplies. FSA accounts have a special added bonus of covering daycare costs up to a set amount annually ($2500 for single parents and $5000 for married couples). Money paid into an HSA stays with you, but money paid into an FSA can be forfeited if it’s not used by the end of the year (unless an employer elects a special FSA rollover feature that covers up to $500 annually). The money paid into an HSA rolls over from year to year and transfers from company to company. You can also withdraw money from an HSA account, however taxes then apply and a withdrawal penalty will be imposed. With an FSA account, you can buy qualifying medical supplies with any remaining money at the end of the year. All it takes is submitting proof that it was a medical supply and all accompanying receipts. This helps ensure that your purchase doesn’t get denied by your FSA provider, because money spent on nonmedical related expenses are subject to taxes and fees on those purchases.

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