Wondering how much tax savings is available through both an FSA and HSA in 2024? Here’s the answer, along with a link to eligible FSA purchases.
FSA-HSA Contribution Limits For 2022
Both FSA and HSA contribution limits for 2022 have increased, although employers have discretion on whether they allow the full IRS maximums.
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‘Tis the season to make and finalize FSA contributions for the 2022 plan year. If you’d like to tax-shelter a portion of your income for 2022, please see the increased contribution amounts below for both Flexible Spending Account (FSA) and Health Savings Account (HSA) participants.
What is the 2022 FSA contribution limit?
The IRS announced an increase to the Health FSA contribution limit for 2022, raising your maximum contribution amount to $2,850. This is a $100 increase from the 2021 limit of $2,750. However, your employer may impose their own dollar limit on employee salary reduction contributions to Health FSAs if they’d prefer not to offer the IRS maximum. Please contact your HR department with specific questions about your 2022 Health FSA contribution limit.
What is the FSA carryover amount for 2022?
While your employer can impose their *own limits, the IRS maintains the 20% of annual contribution limit threshold for carryover amounts. However, unique to 2022 (and part of the Consolidated Appropriations Act), your company may allow you to carry over your entire healthcare and/or dependent care FSA balances from 2021 to 2022 rather than just the 20% portion. Because this is at full discretion of your employer, please contact HR with specific questions about your FSA carryover amount.
*Stratus.hr FSA participants have a rollover amount of $550 from 2021 to 2022.
What is the 2022 dependent care FSA contribution limit?
The 2022 dependent care FSA contribution limit will remain at $5,000 for single taxpayers and married couples filing jointly, or $2,500 for married couples filing separately. Please note that the limit caps at a combined $5,000, even if both you and your spouse have an employer-sponsored FSA plan.
What is the 2022 HSA contribution limit?
HSA limits for 2022 will increase to $3,650, a bump of $50 for self-only coverage ($7,300 for family). Remember, you must have a qualifying High Deductible Health Plan (HDHP) to be eligible for an HSA.
What is Health FSA?
A Health FSA (or just FSA) allows you to set aside pre-tax dollars to apply to out-of-pocket expenses for eligible medical, dental, vision, pharmacy, and dependent care expenses. By using pre-tax dollars for eligible expenses, you ultimately lower your taxable income, which saves you money.
Please watch this video for more information.
What is a Dependent Care FSA?
This type of FSA allows you to pay for dependent care expenses with pre-tax dollars contributed into your account. The money can then be used tax-free if you’re paying for eligible expenses such as elderly care or child daycare.
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What is a Health Savings Account (HSA)?
An HSA is similar to an FSA in that it lowers your taxable income and is used to pay for eligible health care expenses. The differences between an HSA and FSA are:
- HSA has a higher maximum annual contribution ($3,650 for 2022).
- Money in your HSA accrues from year to year like a bank account and earns interest.
- Your HSA contributions can be changed throughout the calendar year.
- You must be enrolled in a qualified HDHP to contribute to an HSA.
If you participate in an HSA, you can only participate in an FSA if it’s a limited-purpose FSA. This means you can only use FSA dollars for dental, vision, and over-the-counter expenses not covered by your health plan.
Are COVID-19 related expenses still eligible for reimbursement under my tax-free account FSA or HSA?
Yes, the IRS announced in March 2021 that your personal protective equipment purchases (face masks, hand sanitizer, sanitizing wipes) for the primary purpose of preventing the spread of COVID-19 are considered tax deductible medical expenses. This means you can claim comparable personal expenses with your FSA or HSA dollars.
Can both my spouse and I contribute to our employers’ FSA plans?
If both you and your spouse are eligible to contribute to your employers’ health FSA plans, you may each contribute up to your employer’s FSA limit. This means you could potentially maximize the household health FSA limit of $5,700, pending your employer maximum contribution amounts.
For more information about FSAs, HSAs, open enrollment, or any other benefits-related questions, please contact our benefits team at email@example.com.
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