Health Savings Accounts vs. Flexible Spending Accounts

Benefit eligible employees have two options to elect to have pre-tax dollars be deducted from their paychecks to cover unreimbursed qualified medical, dental, prescription and vision expenses. A Health Savings Account (HSA) managed by the Public Employee’s Benefits Program (PEBP) and administered by HSA Bank and a Flexible Spending Account (FSA) administered by ASIFlex.

2024 Limits

Health Savings Account (HSA)

PEBP offers Health Savings Accounts to participants of the Consumer Driven Health Plan (CDHP-PPO). An HSA is a tax free account used to pay for qualified medical expenses in conjunction with a High Deductible Health Plan.

Once signed up for the CDHP-PPO, participants will be provided a tax-free contribution(s) or “seed money” into the HSA to help offset out of pocket high deductible expenses.  A Healthscope HSA debit card with a VISA logo will be provided to use to pay out-of-pocket expenses. Any qualified medical or prescription expense will count toward the annual CDHP-PPO deductible.

If not eligible for an HSA, employees on the CDHP-PPO plan are automatically enrolled in a Health Reimbursement Arrangement (HRA). This account will also receive the tax-free contribution(s) or “seed money”. As the HRA is owned by PEBP, participants are not eligible to set aside extra pre-tax contributions.

FISCAL YEAR 2024-25 TAX-FREE CONTRIBUTIONS FROM PEBP

**Participants enrolled in the CDHP on August 1st or thereafter will receive a pro-rated amount for the remainder of the plan year.

Resources

• HSA Bank
• HSA Bank Portal
• List of qualified expenses for HSA
• IRS publication 969
• FAQ: How to Change My HSA Participant Contribution Anytime 
• HSA Bank: How to Link a Personal Bank Account

Requirements

• Participants have to be enrolled in a qualified high deductible health plan.
• Participants must not have other medical coverage.
• Participants cannot be claimed as a dependent on someone else’s tax return (excludes joint returns).
• You or your spouse cannot be enrolled in a Medical Flexible Spending Account or HRA, but you may be enrolled in a Limited Scope or Dependent Care FSA.

Benefits

• Receive tax-free contributions from PEBP.
• Account owned by employee.
• Eligible to voluntarily contribute pre-tax dollars any time in the year.
• Changes to voluntary contributions can be made any time in the year.
• Funds carry over from one year to the next (no “use-it-or-lose-it” provision).
• Funds grow tax-deferred.
• Able to use HSA Bank VISA card to pay for qualified eligible purchases directly from the HSA account.
• Funds are portable – if employment ends, any existing funds in the HSA stay with participant.

Limitations

• Voluntary contributions are made available only after deducted from a paycheck.
• Not available for HMO participants.
• Not available for Medicare participants.
• Reimbursements must be submitted to HSA Bank within a year of the date of service.

Medical Flexible Spending Account (FSA)

Flexible Spending Accounts are offered to any benefit eligible employee, regardless of accepting the medical insurance or not.

The Medical FSA provides participants the opportunity to have funds deducted on a pre-tax basis to cover out-of-pocket medical, dental, prescription and vision expenses, including certain over-the-counter medications.  Similar to the HSA, the FSA comes with a debit card (upon request) to pay for qualified medical expenses.

For employees enrolled in the CDHP-PPO plan with an HSA, the University offers a Limited Scope FSA that allows participants to have deducted pre-tax funds for dental and vision expenses only.

For employees enrolled in the CDHP-PPO plan with an HRA, the University allows enrollment into the Medical FSA used to cover out-of-pocket medical, dental, prescription and vision expenses, including certain over-the-counter medications.

Resources

• ASI Flex Portal
• Flexible Spending Account (ASI) Claim form
• List of qualified expenses for FSA
• FSA Overview
• Health Care FSA Overview
• Dependent Care FSA Overview
• Frequently Asked Questions
• FSA Expense Planning Worksheet

Benefits

• Available to any benefit eligible employee (HMO and PPO).
• Available to employees who actively decline the health insurance.
• Annual elected amounts are pre-funded and made available immediately after enrollment.

Limitations

• Enrollment in FSA makes participants ineligible for a Health Savings Account.
• Enrollment in FSA is only available during open enrollment or within 60 days of hire/qualifying event.
• Changes cannot be made during the plan year, unless there is a qualifying event.
• FSA is a use-it-or-lose it product. Must use funds before end of employment or end of plan year (6/30).
• Reimbursement claims must be submitted within 90 days of employment ending or during the grace period.  The grace period is the 90 days after the end of the plan year, and allow you to submit reimbursement claims for expenses incurred in the previous plan year.

Dependent Care Flexible Saving Account (FSA)

The Dependent Care FSA provides participants the opportunity to have funds deducted on a pre-tax basis for dependent care expenses for eligible dependents.

Benefits

• Use pre-tax dollars for childcare or preschool tuition expenses.
• Use pre-tax dollars for elder care expenses.

Limitations

• No debit card is available. All reimbursement claims must be submitted to ASI Flex.
• Funds are only made available after the funds are deducted from paycheck.
• Dependent Care is a use-it-or-lose-it account. Funds must be used before end of plan year (6/30).

NOTES:

• If participants were previously enrolled in an FSA and are now enrolling in an HSA, participants will need to have a zero balance in the FSA account by the end of the plan year in order to receive and/or make contributions into an HSA.
• If participants were previously enrolled in an HSA and are now enrolling in an FSA, the HSA account belongs to the participant. Even if a participant is no longer eligible to contribute into an HSA, the funds that are in that account can still be used.