Health Savings Accounts
August 27, 2014Asset Protection Planning
February 18, 2015Dependent Care FSA allows only a grace period; the carryover rule does not apply. See example below.
Dependent Care FSA Example
A married client is an employee of Company Y that offers a Dependent Care FSA. The client contributed monthly up to his $5,000 limit and at year-end uses only $4,000 of his balance to pay for his son’s preschool. If Company Y offers a grace period, the client will have from January 1st until March 15th to use up the remaining $1,000 balance. If the balance is not used by March 15th, the remaining balance is forfeited.
Is it possible to have both an HSA and FSA simultaneously?
Many employees are unsure if they can utilize HSAs and FSAs at the same time. You are able to have both accounts, but only under special circumstances. If your employer offers a Limited Expense FSA (limited to dental, preventative care and vision expenses) or Post-Deductible Care FSA (use funds after the plan deductible is met), then you may still be eligible to have an HSA.1 To learn more about HSAs, read the full article here.
Summary
A plainspoken understanding and a little planning can go a long way in helping FSAs stretch one’s hard earned dollar. Flexible Spending Accounts, both Healthcare and Dependent Care, offer an array of benefits. Clients with high medical expenses or dependents can benefit tremendously from FSA’s due to their flexibility of coverage and pre-funding. Keep in mind, FSAs are financial tools and may not be appropriate for everyone. If you’d like to learn more and discuss options on an individual level, please contact us.
SOURCES:
- http://fas.org/sgp/crs/misc/RL32656.pdf
- https://www.healthcare.gov/can-i-use-a-flexible-spending-account-fsa/
Contributors: Paula Pienkowska is the Director of the Wealth Advisory Group at Riverview Capital Advisers. Alan Arcadipane is a Business Analyst of the Business Advisory Group at Riverview Capital Advisers. Peter Gnall is a Private Wealth Adviser of the Wealth Management Group at Riverview Capital Advisers. Melysa Latham is a member of the Business Advisory Group at Riverview Capital Advisers.
