Mixing
How is an FSA's total annual amount of contribution available on the first day of coverage?
Clash Royale CLAN TAG#URR8PPP
.everyoneloves__top-leaderboard:empty,.everyoneloves__mid-leaderboard:empty margin-bottom:0;
up vote
1
down vote
favorite
I'm walking through my open enrollment documents and there's this part that surprises me...
Is the annual amount of the contribution available on the first day of
coverage?
HSA: No. Only the amount currently available in the HSA may be used to pay or reimburse qualified expenses.
FSA: Yes.
I had phoned my dentist this morning to get an estimate for some treatment I wanted to begin to sock away money for so I could make the payment at the end of the year and get my FSA contributions lined up today. I was under the impression that I had to wait for the payroll contributions to accrue to get to the balance needed to cover the treatment expense. This would match my experience with HSA's where it's my own private account and I can only debit from it what the current balance is much like a regular checking account.
However, this FSA account seems like an entirely different animal. It seems to me like an FSA is an account that can hold a negative balance in the account that I'm expecting cannot exceed my yearly contributions. How is all this managed and regulated exactly? I see biweekly withdrawals out of payroll, where does the money come from if I spend the total yearly amount in the first month of coverage using the assigned Health Care Spending Card.
united-states fsa
asked 4 hours ago
jxramos
426513
add a comment |
up vote
1
down vote
favorite
I'm walking through my open enrollment documents and there's this part that surprises me...
Is the annual amount of the contribution available on the first day of
coverage?
HSA: No. Only the amount currently available in the HSA may be used to pay or reimburse qualified expenses.
FSA: Yes.
I had phoned my dentist this morning to get an estimate for some treatment I wanted to begin to sock away money for so I could make the payment at the end of the year and get my FSA contributions lined up today. I was under the impression that I had to wait for the payroll contributions to accrue to get to the balance needed to cover the treatment expense. This would match my experience with HSA's where it's my own private account and I can only debit from it what the current balance is much like a regular checking account.
However, this FSA account seems like an entirely different animal. It seems to me like an FSA is an account that can hold a negative balance in the account that I'm expecting cannot exceed my yearly contributions. How is all this managed and regulated exactly? I see biweekly withdrawals out of payroll, where does the money come from if I spend the total yearly amount in the first month of coverage using the assigned Health Care Spending Card.
united-states fsa
asked 4 hours ago
jxramos
426513
add a comment |
up vote
1
down vote
favorite
up vote
1
down vote
favorite
I'm walking through my open enrollment documents and there's this part that surprises me...
Is the annual amount of the contribution available on the first day of
coverage?
HSA: No. Only the amount currently available in the HSA may be used to pay or reimburse qualified expenses.
FSA: Yes.
I had phoned my dentist this morning to get an estimate for some treatment I wanted to begin to sock away money for so I could make the payment at the end of the year and get my FSA contributions lined up today. I was under the impression that I had to wait for the payroll contributions to accrue to get to the balance needed to cover the treatment expense. This would match my experience with HSA's where it's my own private account and I can only debit from it what the current balance is much like a regular checking account.
However, this FSA account seems like an entirely different animal. It seems to me like an FSA is an account that can hold a negative balance in the account that I'm expecting cannot exceed my yearly contributions. How is all this managed and regulated exactly? I see biweekly withdrawals out of payroll, where does the money come from if I spend the total yearly amount in the first month of coverage using the assigned Health Care Spending Card.
united-states fsa
asked 4 hours ago
jxramos
426513
I'm walking through my open enrollment documents and there's this part that surprises me...
Is the annual amount of the contribution available on the first day of
coverage?
HSA: No. Only the amount currently available in the HSA may be used to pay or reimburse qualified expenses.
FSA: Yes.
I had phoned my dentist this morning to get an estimate for some treatment I wanted to begin to sock away money for so I could make the payment at the end of the year and get my FSA contributions lined up today. I was under the impression that I had to wait for the payroll contributions to accrue to get to the balance needed to cover the treatment expense. This would match my experience with HSA's where it's my own private account and I can only debit from it what the current balance is much like a regular checking account.
However, this FSA account seems like an entirely different animal. It seems to me like an FSA is an account that can hold a negative balance in the account that I'm expecting cannot exceed my yearly contributions. How is all this managed and regulated exactly? I see biweekly withdrawals out of payroll, where does the money come from if I spend the total yearly amount in the first month of coverage using the assigned Health Care Spending Card.
united-states fsa
united-states fsa
asked 4 hours ago
jxramos
426513
asked 4 hours ago
jxramos
426513
asked 4 hours ago
jxramos
426513
asked 4 hours ago
jxramos
426513
asked 4 hours ago
jxramos
426513
426513
add a comment |
add a comment |
2 Answers
2
active
oldest
votes
up vote
3
down vote
FSA IS an entirely different animal from HSA. FSA is a "spending arrangement" not a "savings account."
With FSA, you elect to forego some amount of income for the year. As of January 1 you have access to spend up to that amount of your employer's money for qualified expenses. If you leave the company having spent all of your allotted funds without contributing an equal amount, there is no repercussions to you, no collection efforts, etc. If, however, you don't spend your allotted amount by the end of the plan year it's forfeited but many plans take advantage of either extending the claim submission deadline or a rollover of a portion of your unspent funds.
An HSA is a savings account with specific criteria that must be met in order exempt those funds from income taxation. Just like your other savings accounts you can only spend money contained in the account. Your employer can contribute in to your account, but also just like your other savings accounts your employer can't see your balance etc; because it's a savings account that's in your name.
answered 3 hours ago
quid
32k460109
Somewhere, you might add that unspent FSA dollars are forfeited. With many employees, odds are more forfeit than manage to leave mid-year after spending a year's worth of FSA money.
– JoeTaxpayer♦
2 hours ago
That's certainly the big concern everyone has related to FSAs but I think it's overblown given the plans I've seen. From what I've seen, FSAs are used primarily by high claim folks, chronic illnesses, high prescription drug use, young children, etc. People who definitely hit deductibles. It's pretty rare for significant amounts of money to remain unused FSAs. In fact, most of the employers I've seen chose the extended grace period rather than a fund rollover because the problem people have is timely submission of claims, not a lack of claims to consume their election.
– quid
1 hour ago
add a comment |
up vote
1
down vote
FSAs and HSAs are different. An FSA is more like insurance while an HSA is more like a savings account.
Relevant difference here being:
You can't withdraw more from an HSA than you've deposited. But if you have money left over at the end of the year, it's still yours, it carries over to the next year and the next indefinitely.
You can withdraw more from an FSA than you've deposited. But if you withdraw less and you have money left over at the end of the year, it's lost. (There are some rules for carrying money over for 2 months into the next year, or carrying over up to $500.) (Exact numbers may have changed.)
So your employer or the insurance company or whoever is managing an FSA is taking a risk. Some employees will withdraw money from the FSA before they deposit it, and the company will have to come up with the cash. Some employees will withdraw more than they've deposited, and then quit their job and never pay it back, and the company will take a loss. But other employees will deposit money, never withdraw it, and then they forfeit it at the end of the year.
It's like insurance. If you buy a life insurance policy and you live a long time, you might pay more in premiums than the insurance company pays out when you die, and the insurance company is happy. If you buy a life insurance policy and then shortly after that you die in a tragic accident, then your family may collect more in benefits than you paid in premiums, and you win!
answered 3 hours ago
Jay
15.5k1854
add a comment |
2 Answers
2
active
oldest
votes
2 Answers
2
active
oldest
votes
active
oldest
votes
active
oldest
votes
up vote
3
down vote
FSA IS an entirely different animal from HSA. FSA is a "spending arrangement" not a "savings account."
With FSA, you elect to forego some amount of income for the year. As of January 1 you have access to spend up to that amount of your employer's money for qualified expenses. If you leave the company having spent all of your allotted funds without contributing an equal amount, there is no repercussions to you, no collection efforts, etc. If, however, you don't spend your allotted amount by the end of the plan year it's forfeited but many plans take advantage of either extending the claim submission deadline or a rollover of a portion of your unspent funds.
An HSA is a savings account with specific criteria that must be met in order exempt those funds from income taxation. Just like your other savings accounts you can only spend money contained in the account. Your employer can contribute in to your account, but also just like your other savings accounts your employer can't see your balance etc; because it's a savings account that's in your name.
answered 3 hours ago
quid
32k460109
Somewhere, you might add that unspent FSA dollars are forfeited. With many employees, odds are more forfeit than manage to leave mid-year after spending a year's worth of FSA money.
– JoeTaxpayer♦
2 hours ago
That's certainly the big concern everyone has related to FSAs but I think it's overblown given the plans I've seen. From what I've seen, FSAs are used primarily by high claim folks, chronic illnesses, high prescription drug use, young children, etc. People who definitely hit deductibles. It's pretty rare for significant amounts of money to remain unused FSAs. In fact, most of the employers I've seen chose the extended grace period rather than a fund rollover because the problem people have is timely submission of claims, not a lack of claims to consume their election.
– quid
1 hour ago
add a comment |
up vote
3
down vote
FSA IS an entirely different animal from HSA. FSA is a "spending arrangement" not a "savings account."
With FSA, you elect to forego some amount of income for the year. As of January 1 you have access to spend up to that amount of your employer's money for qualified expenses. If you leave the company having spent all of your allotted funds without contributing an equal amount, there is no repercussions to you, no collection efforts, etc. If, however, you don't spend your allotted amount by the end of the plan year it's forfeited but many plans take advantage of either extending the claim submission deadline or a rollover of a portion of your unspent funds.
An HSA is a savings account with specific criteria that must be met in order exempt those funds from income taxation. Just like your other savings accounts you can only spend money contained in the account. Your employer can contribute in to your account, but also just like your other savings accounts your employer can't see your balance etc; because it's a savings account that's in your name.
answered 3 hours ago
quid
32k460109
Somewhere, you might add that unspent FSA dollars are forfeited. With many employees, odds are more forfeit than manage to leave mid-year after spending a year's worth of FSA money.
– JoeTaxpayer♦
2 hours ago
That's certainly the big concern everyone has related to FSAs but I think it's overblown given the plans I've seen. From what I've seen, FSAs are used primarily by high claim folks, chronic illnesses, high prescription drug use, young children, etc. People who definitely hit deductibles. It's pretty rare for significant amounts of money to remain unused FSAs. In fact, most of the employers I've seen chose the extended grace period rather than a fund rollover because the problem people have is timely submission of claims, not a lack of claims to consume their election.
– quid
1 hour ago
add a comment |
up vote
3
down vote
up vote
3
down vote
FSA IS an entirely different animal from HSA. FSA is a "spending arrangement" not a "savings account."
With FSA, you elect to forego some amount of income for the year. As of January 1 you have access to spend up to that amount of your employer's money for qualified expenses. If you leave the company having spent all of your allotted funds without contributing an equal amount, there is no repercussions to you, no collection efforts, etc. If, however, you don't spend your allotted amount by the end of the plan year it's forfeited but many plans take advantage of either extending the claim submission deadline or a rollover of a portion of your unspent funds.
An HSA is a savings account with specific criteria that must be met in order exempt those funds from income taxation. Just like your other savings accounts you can only spend money contained in the account. Your employer can contribute in to your account, but also just like your other savings accounts your employer can't see your balance etc; because it's a savings account that's in your name.
answered 3 hours ago
quid
32k460109
FSA IS an entirely different animal from HSA. FSA is a "spending arrangement" not a "savings account."
With FSA, you elect to forego some amount of income for the year. As of January 1 you have access to spend up to that amount of your employer's money for qualified expenses. If you leave the company having spent all of your allotted funds without contributing an equal amount, there is no repercussions to you, no collection efforts, etc. If, however, you don't spend your allotted amount by the end of the plan year it's forfeited but many plans take advantage of either extending the claim submission deadline or a rollover of a portion of your unspent funds.
An HSA is a savings account with specific criteria that must be met in order exempt those funds from income taxation. Just like your other savings accounts you can only spend money contained in the account. Your employer can contribute in to your account, but also just like your other savings accounts your employer can't see your balance etc; because it's a savings account that's in your name.
answered 3 hours ago
quid
32k460109
edited 1 hour ago
answered 3 hours ago
quid
32k460109
answered 3 hours ago
quid
32k460109
answered 3 hours ago
quid
32k460109
32k460109
Somewhere, you might add that unspent FSA dollars are forfeited. With many employees, odds are more forfeit than manage to leave mid-year after spending a year's worth of FSA money.
– JoeTaxpayer♦
2 hours ago
That's certainly the big concern everyone has related to FSAs but I think it's overblown given the plans I've seen. From what I've seen, FSAs are used primarily by high claim folks, chronic illnesses, high prescription drug use, young children, etc. People who definitely hit deductibles. It's pretty rare for significant amounts of money to remain unused FSAs. In fact, most of the employers I've seen chose the extended grace period rather than a fund rollover because the problem people have is timely submission of claims, not a lack of claims to consume their election.
– quid
1 hour ago
add a comment |
Somewhere, you might add that unspent FSA dollars are forfeited. With many employees, odds are more forfeit than manage to leave mid-year after spending a year's worth of FSA money.
– JoeTaxpayer♦
2 hours ago
That's certainly the big concern everyone has related to FSAs but I think it's overblown given the plans I've seen. From what I've seen, FSAs are used primarily by high claim folks, chronic illnesses, high prescription drug use, young children, etc. People who definitely hit deductibles. It's pretty rare for significant amounts of money to remain unused FSAs. In fact, most of the employers I've seen chose the extended grace period rather than a fund rollover because the problem people have is timely submission of claims, not a lack of claims to consume their election.
– quid
1 hour ago
Somewhere, you might add that unspent FSA dollars are forfeited. With many employees, odds are more forfeit than manage to leave mid-year after spending a year's worth of FSA money.
– JoeTaxpayer♦
2 hours ago
Somewhere, you might add that unspent FSA dollars are forfeited. With many employees, odds are more forfeit than manage to leave mid-year after spending a year's worth of FSA money.
– JoeTaxpayer♦
2 hours ago
That's certainly the big concern everyone has related to FSAs but I think it's overblown given the plans I've seen. From what I've seen, FSAs are used primarily by high claim folks, chronic illnesses, high prescription drug use, young children, etc. People who definitely hit deductibles. It's pretty rare for significant amounts of money to remain unused FSAs. In fact, most of the employers I've seen chose the extended grace period rather than a fund rollover because the problem people have is timely submission of claims, not a lack of claims to consume their election.
– quid
1 hour ago
That's certainly the big concern everyone has related to FSAs but I think it's overblown given the plans I've seen. From what I've seen, FSAs are used primarily by high claim folks, chronic illnesses, high prescription drug use, young children, etc. People who definitely hit deductibles. It's pretty rare for significant amounts of money to remain unused FSAs. In fact, most of the employers I've seen chose the extended grace period rather than a fund rollover because the problem people have is timely submission of claims, not a lack of claims to consume their election.
– quid
1 hour ago
add a comment |
up vote
1
down vote
FSAs and HSAs are different. An FSA is more like insurance while an HSA is more like a savings account.
Relevant difference here being:
You can't withdraw more from an HSA than you've deposited. But if you have money left over at the end of the year, it's still yours, it carries over to the next year and the next indefinitely.
You can withdraw more from an FSA than you've deposited. But if you withdraw less and you have money left over at the end of the year, it's lost. (There are some rules for carrying money over for 2 months into the next year, or carrying over up to $500.) (Exact numbers may have changed.)
So your employer or the insurance company or whoever is managing an FSA is taking a risk. Some employees will withdraw money from the FSA before they deposit it, and the company will have to come up with the cash. Some employees will withdraw more than they've deposited, and then quit their job and never pay it back, and the company will take a loss. But other employees will deposit money, never withdraw it, and then they forfeit it at the end of the year.
It's like insurance. If you buy a life insurance policy and you live a long time, you might pay more in premiums than the insurance company pays out when you die, and the insurance company is happy. If you buy a life insurance policy and then shortly after that you die in a tragic accident, then your family may collect more in benefits than you paid in premiums, and you win!
answered 3 hours ago
Jay
15.5k1854
add a comment |
up vote
1
down vote
FSAs and HSAs are different. An FSA is more like insurance while an HSA is more like a savings account.
Relevant difference here being:
You can't withdraw more from an HSA than you've deposited. But if you have money left over at the end of the year, it's still yours, it carries over to the next year and the next indefinitely.
You can withdraw more from an FSA than you've deposited. But if you withdraw less and you have money left over at the end of the year, it's lost. (There are some rules for carrying money over for 2 months into the next year, or carrying over up to $500.) (Exact numbers may have changed.)
So your employer or the insurance company or whoever is managing an FSA is taking a risk. Some employees will withdraw money from the FSA before they deposit it, and the company will have to come up with the cash. Some employees will withdraw more than they've deposited, and then quit their job and never pay it back, and the company will take a loss. But other employees will deposit money, never withdraw it, and then they forfeit it at the end of the year.
It's like insurance. If you buy a life insurance policy and you live a long time, you might pay more in premiums than the insurance company pays out when you die, and the insurance company is happy. If you buy a life insurance policy and then shortly after that you die in a tragic accident, then your family may collect more in benefits than you paid in premiums, and you win!
answered 3 hours ago
Jay
15.5k1854
add a comment |
up vote
1
down vote
up vote
1
down vote
FSAs and HSAs are different. An FSA is more like insurance while an HSA is more like a savings account.
Relevant difference here being:
You can't withdraw more from an HSA than you've deposited. But if you have money left over at the end of the year, it's still yours, it carries over to the next year and the next indefinitely.
You can withdraw more from an FSA than you've deposited. But if you withdraw less and you have money left over at the end of the year, it's lost. (There are some rules for carrying money over for 2 months into the next year, or carrying over up to $500.) (Exact numbers may have changed.)
So your employer or the insurance company or whoever is managing an FSA is taking a risk. Some employees will withdraw money from the FSA before they deposit it, and the company will have to come up with the cash. Some employees will withdraw more than they've deposited, and then quit their job and never pay it back, and the company will take a loss. But other employees will deposit money, never withdraw it, and then they forfeit it at the end of the year.
It's like insurance. If you buy a life insurance policy and you live a long time, you might pay more in premiums than the insurance company pays out when you die, and the insurance company is happy. If you buy a life insurance policy and then shortly after that you die in a tragic accident, then your family may collect more in benefits than you paid in premiums, and you win!
answered 3 hours ago
Jay
15.5k1854
FSAs and HSAs are different. An FSA is more like insurance while an HSA is more like a savings account.
Relevant difference here being:
You can't withdraw more from an HSA than you've deposited. But if you have money left over at the end of the year, it's still yours, it carries over to the next year and the next indefinitely.
You can withdraw more from an FSA than you've deposited. But if you withdraw less and you have money left over at the end of the year, it's lost. (There are some rules for carrying money over for 2 months into the next year, or carrying over up to $500.) (Exact numbers may have changed.)
So your employer or the insurance company or whoever is managing an FSA is taking a risk. Some employees will withdraw money from the FSA before they deposit it, and the company will have to come up with the cash. Some employees will withdraw more than they've deposited, and then quit their job and never pay it back, and the company will take a loss. But other employees will deposit money, never withdraw it, and then they forfeit it at the end of the year.
It's like insurance. If you buy a life insurance policy and you live a long time, you might pay more in premiums than the insurance company pays out when you die, and the insurance company is happy. If you buy a life insurance policy and then shortly after that you die in a tragic accident, then your family may collect more in benefits than you paid in premiums, and you win!
answered 3 hours ago
Jay
15.5k1854
answered 3 hours ago
Jay
15.5k1854
answered 3 hours ago
Jay
15.5k1854
answered 3 hours ago
Jay
15.5k1854
15.5k1854
add a comment |
add a comment |
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
StackExchange.ready(
function ()
StackExchange.openid.initPostLogin('.new-post-login', 'https%3a%2f%2fmoney.stackexchange.com%2fquestions%2f101949%2fhow-is-an-fsas-total-annual-amount-of-contribution-available-on-the-first-day-o%23new-answer', 'question_page');
);
Post as a guest
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
