Get Your Money Back With FSA or HSA Claims

October 22, 2014 by: 0

It is most stressful for people who are finding it difficult to pay their medical bills. It is more painful and will get you in troubles if you left it unpaid. Here comes HSA and FSA claims to help you to constantly come out from your worries about your bills and helps you to be at relief financially by reducing taxes. Let us discuss in detail about how to Get Your Money Back with FSA or HSA Claims in this article.

With the help of Flexible Spending Accounts (FSA), you can reimburse your medical expenses at any time during the whole financial year. The total annual amount can be withdrawn and you can also receive funds in advance with the help of FSA. If you know the expected medical expenses for upcoming year then you can make the election with the FSA after checking with its administrator whether they are eligible FSA expenses or not. It is a great savings program to go with since it covers all medical expenses throughout the complete year. Money in a FSA should be spent within the year or else you may lose the money. It also allows the account holders to log miles for medical centre trips or trips to buy FSA eligible items. Reimbursements of such trips are set by IRS (Internal Revenue Service). Before applying for reimbursements of such trips, try to have doctor’s prescription, bills, receipt of medical store and proven mileage that you have travelled. Mileage calculations can be done with the help of Google maps. This is the best way of running down the balance of FSA account. It also allows you to claim mileage reimbursement with the help of smart phone application. It also reduces the income tax rates.
FSA

Types of FSA:

  • HCFSA – Health Care Flexible Spending Account is used to pay any type of insurance premiums which includes qualified medical bills, coinsurance and health care expenses.
  • LEX HCFSA – Limited Expenses Health Care Flexible Spending Account is available only for employees who are having the combination plans of HDHP along with HSA. It takes care of qualified out of pocket expenses and also includes dental and vision care services that meet the IRS of medical care.
  • DCA – Dependent Care Account is applicable for you and your spouse only if both are working or doing full time education. It is also applicable for physically or mentally challenged dependent and for children below 13 years of age.

To succeed with FSA plans follow the three important steps:

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  • Planning – Make a plan how much money you are going to set aside in Flexible Spending Account for your medical purpose.
  • Spending – Check the eligibility criteria and qualified medical expenses of FSA for reimbursement. It mostly includes medical costs, medications and dependent care expenses.
  • Collecting – Do collect your money which you have deposited aside for medical purpose through reimbursement process within the time limit you have.

Benefits of FSA:

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  • it reduces your social security, medical expenses and unemployment tax liabilities
  • it helps in paying out of pocket expenses which are qualified and coming under eligible criteria
  • it helps in taking care of dependent medical expenses
  • Premium rates are low and it helps in reducing tax
  • You can use FSAs to pay medical centre trips by calculating the mileage you have travelled to buy qualified products
  • It provides option of paying medical expenses easily online

HSA stands for Health Savings Accounts which acts as tax sheltered account for employees to get benefitted by getting money back for current and future medical expenses. It is an account completely owned by the employee and in order to meet IRS you must be coupled with HDHP (High Deductible Health Plan). It is more flexible and it sets certain amount to cover the medical expenses of employee. While making electronic deposits make sure the deposits are coded properly for tax purposes. Always pay attention to the limits for the year while contributing with HSA. Initial deposit is made in the HSA accounts and left unused until it is needed but it remains growing tax free. This strategy helps you in both spending and contributing. It maximizes the tax benefits and helps you for future claim. It is a flexible arrangement to cover your health care and to save money. Vision and dental expenses are very expensive and many insurance plans are inadequate and it does not provide that much coverage as you expect. HSA is a high deductible health plan which provides you tax free funds that you can use for dental and vision care settlements and other medical costs. It has no limits of annual deposit and it has no restrictions of leaving amount in your account.
HSA

Combination of both HSA and HDHP will give you more effective health care allowance. So it is compulsory to take up HDHP if you are contributing with HSA. When you opt for this combination you can carry your savings account forward to next year. It is your wish to maintain the account by depositing amount in lump or depositing in account by smaller amounts on regular basis.

There are two parts composing an HSA – First part is considering HSA as an investment account which is similar to an IRA structure. This kind of investment gives you interest earnings and you do not need to pay any taxes. If you are the employee with HSA accounts then it will be pre- tax basis that is, the amount will be directly deducted from your payroll. It is tax free process since it is directly deducting from your earnings. It has some maximum contribution limitations.

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The second part is the medical plan which will suits for the age less than 65. It includes Medicare and it is qualified for dental, vision, disabilities and other illness plans. It also meets out of pocket expenses and it includes deductible items. If you do not use these funds in one year it won’t get lost but remains in account until you withdraw it. This is the most beneficial thing in HSA.

HSA for herbal medicines, nutritional supplements and over the counter medication:
You can pay herbal medicines and over the counter medication with Health Savings Accounts if you have doctor’s prescription. You can take herbal remedies like immune stimulants with the help of HSA. You can pay tax free for the motion sickness medicine, sleeping ad tablets, cold pills and aspirin with the help of Health Savings Accounts. If your medical practitioner recommends you to take nutritional supplements in order to get prevented from specific health issue, then you can use Health Savings Accounts to pay for it. Vitamins, fish oil supplements are the most of the doctors’ preference to take. That you can pay with HSA.

It includes long term insurance program for those who have exceeded the age of 65. You have the option of withdrawing money from HSA account for unapproved non medical expenses but you have to pay 10% penalty if your age is less than 65. But this penalty is not for those who have exceeded the age of 65 but have to pay ordinary income tax. Thus, long term insurance program of HSA helps in better manner for old people. If you remain healthy and never used the funds that are offered by HSA then will be supplement in your retirement settlement.

Working of HSA:

5 steps

  • Deposits – Policy holders have to deposit the annual maximum amount which is lesser than actual deductible or IRS limits. It has statutory limits for maximum contributions. The amount deposited by you is your property except the source. If you end the HSA policy coverage, you will be losing further funds but funds already available in your account remains the same for you.
  • Investments – It is same as IRA since it is sheltered from taxation and HSA funds are rolled over.
  • Withdrawals – Advance approval is not required for withdrawing and it is 100% tax free if your expenses are qualified medical expenses. Other expenses which are not included under medical plans are subject to deductible and coinsurance. These funds are not applicable for over the counter drugs if you don’t have doctor’s prescription. You can withdraw the funds using cheque or debit card and get your money back with the help of reimbursement process. Withdrawals for non qualified medical expenses can be presented but you may have to pay certain percentage of penalty. However, penalty is not for those who have crossed 65 years of age but have to pay income tax for it.

What you should know about HSA plans:

  • It cuts the medical expenses and it is a significant savings for people who pay all of their health premiums.
  • Individuals have their own freedom of choice that is they are responsible for their own health care and decision making. This self reliance approach is not comfortable for those people having co-pay plans.
  • It reduces the tax of your income regardless to whether you are spending or just saving it. Withdrawals are also tax free when you use it for qualified medical expenses. In many situations, it is used as higher prices savings plan with reduced tax.
  • To get the HSA plans you must be qualified with high health insurance policy with a high deductible. You should be working with the highly qualified and licensed health insurance broker who has much experience in HSA plans.
  • To get qualified for the HSA plan, you should be insurable – which is one of the eligibility criteria of Health Savings Accounts. You are not supposed to change the health plans in the middle of ongoing medical treatments. Most of the insurance companies are offering HSA without conducting exams which is hassle free to qualify.
  • It has high deductible but insurance premiums are low not that much as you expect. Lower premiums is nothing but it represents the low net cost of an HSA plan giving importance to other beneficial factors like lower tax and immediate option for paying emergency medical bills.
  • It is the most efficient solution for many people to keep a lid on increasing rates with the help of HSA plans. Percentages of insurer’s base are increases which in turn results in lowering base premiums.

Benefits of HSA plans:

  • Premiums and Deductibles – You get lower premium rates with HSA compared with traditional health insurance plans since it has higher deductible.
  • Flexibility – It is more flexible to pay qualified medical expenses which are not covered in other insurances on the basis of pre-tax.
  • Liability and Coinsurance – During catastrophic situation, it will help you in paying out of pocket expenses liability which is very less when compared to other sorts of health plans. It also involves no coinsurance since it covers 100% after the deductibles.
  • Qualified long term care premiums – It helps old people of age more than 65 to use this HSA savings for living expenses by paying ordinary income taxes.
  • Portable – It comes with you wherever you go at any point in time.
  • Use it or Lose it – It does not have the problem of losing the deposited amount if you are not using it for long period of time.
  • Your savings grow tax deferred and tax deductibles off of gross income.
  • It provides high quality plans with lower costs.
  • No time limit – Unlike FSA, it has no longer time period to spend the amount. The deposited amount will be rolled over the years for future medical reimbursements. If you are not using it until you retire, then it will get added in retirement settlements.
  • Combo of HSA and HDHP – You will be getting more effective health care allowance if you get combination of both HSA and HDHP.
  • Triple tax savings – Money you deposit is tax deductible up to the legal limit. Your deposited amount grows tax free and it is used as savings account for you. All medical expenses can be paid with it which is absolutely income- tax free.

Thus getting back your money by reimbursement is more challenging than it looks. Hoping this article may help you in various ways when you are in search or in trouble to get Your Money back with FSA or HSA Claims. Sources are always available for you to consult for help when needed, get it by knowing how to use it.

 
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