![]() ![]() An LPFSA is primarily used to pay for dental and vision expenses. ![]() With this type of FSA, you can still contribute to an HSA if your employer allows it. If you have a limited-purpose FSA (LPFSA), you can also contribute up to $3,050 in 2023. You generally can’t contribute to a health FSA and health savings account (HSA) at the same time. Medical expenses, like monthly period supplies and over-the-counter products This type of FSA allows you to pay for qualified out-of-pocket expenses, such as: The annual contribution limit applies to health FSAs. If your spouse has a separate FSA under another employer plan, they can make a maximum contribution, too. In 2023, employees can contribute up to $3,050 to an FSA. This is a relatively large increase compared to previous years. In October 2022, the IRS announced the 2023 contribution limit for FSAs. What is the FSA contribution limit for 2023? The inflation-adjusted amount will allow you to put more tax-free dollars toward qualified healthcare items. ![]() But, like in previous years, the IRS has increased the contribution limit on FSAs for 2023. There is a limit to how much you can contribute to an FSA every year. If you use your FSA dollars to cover eligible expenses for you, your spouse, or your dependents, you don’t have to pay taxes on the money. Eligible expenses include certain medical, vision, and dental costs not covered by your health insurance plan. The following table shows the minimum deductible amounts for 2019 to 2023.A flexible spending account (FSA) is an employer-sponsored health benefit that allows employees to pay for qualified out-of-pocket expenses. Again, thanks to higher inflation, these amounts are quite a bit higher than the 2022 figures – $1,400 for self-only coverage and $2,800 for family coverage. For 2023, the health plan must have a deductible of at least $1,500 for self-only coverage or $3,000 for family coverage. To contribute to an HSA, you must be covered under a high deductible health plan. You can avoid the additional tax if you withdraw (1) the excess contributions from your HSA by the due date (including extensions) of your federal income tax return for the year the contributions were made, and (2) any income earned on the withdrawn contributions and include it as income on your tax return for the year you withdraw the contributions and earnings. If you contribute too much to an HSA (including any contributions from your employer), not only will you lose the tax benefits for the excess amount, but you might also have to pay a 6% excise tax on the overage each year the excess contribution remains in your account.įortunately, there's a way around the 6% penalty if you go over the applicable contribution limit. If you or your health plan are not in compliance with the restrictions in place for any particular year, then you can say goodbye to the HSA tax savings for that year. They apply to the amount you can contribute to an HSA for the year, the minimum deductible for your health insurance plan, and your annual out-of-pocket expenses. All-in-all, HSAs can be a great tool for covering your health care costs.īut there are a handful of limitations and requirements that you need to know about, and they're adjusted annually for inflation. You can also hold on to the account when you're no longer working for your current employer and use it tax-free for medical expenses at a different job or even during retirement. There's an "above-the-line" deduction available for contributions to an HSA, money put in an HSA by your employer is excluded from gross income, earnings are tax free, and there's no tax on distributions if you use the funds to pay qualified medical expenses. For many people, HSAs offer a tax-friendly way to pay medical bills. After doing a little research, you might discover that an HSA is the way to go. If your employer offers a health savings account option as part of its benefits package, don't dismiss it out of hand just because you're not familiar with how they work. Savvy Strategies for Your Health Savings Account ![]()
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