Choose the right health savings or reimbursement plan and save on medical costs [The Buffalo News, N.Y.]

Nov. 12—Many workers in the region will not only soon decide on the best health insurance plan for 2023, but also on a health savings or reimbursement plan.

"These reimbursement accounts give individuals the ability to stretch their dollars and in one case, grow them for future needs," Richard Argentieri, chief sales and marketing officer with Independent Health.

Argentieri broke down three types of accounts often available.

1. Health savings account (HSA)

This type of savings account helps health insurance members of qualifying high-deductible health plans cover deductibles, copayments and other medical out-of-pocket expenses. Employers and employees can make contributions. Earnings and withdrawals for eligible expenses are all tax-free. Unspent HSA funds roll over year to year, so employees can build funds to cover current and future health care expenses.

An HSA enables account holders to invest their contributions into mutual funds inside their accounts. At retirement, that money can continue to be used tax-free for medical expenses or for any reason taxed as income, without penalty, just like an IRA or 401(k).

Contribution limits: The IRS sets limits for HSAs. In 2023, they are $3,850 for individuals and $7,750 per family in combined contributions by employer and employee. Account holders that are 55 or older can contribute an annual catch-up contribution of $1,000

An individual can qualify for this account by having a high-deductible health plan. For 2023, the minimum deductible amounts are $1,500 for an individual and $3,000 for a family. The maximum out-of-pocket amounts are $7,500 for an individual and $15,000 for a family. "This limit doesn't apply to out-of-network services," Argentieri said.

"Individuals may establish their own HSAs," he said, "or they may be offered in conjunction with a high-deductible plan."

2. Flexible spending account (FSA)

This employer-sponsored benefits program enables employees to deduct pre-tax dollars from their paychecks to pay for qualified medical expenses for themselves, their spouses and dependents. At the start of each plan year, employees can elect to contribute a certain portion of their pre-tax income to fund their account. "Employees must use these funds within the plan year," Argentieri said, "however, the plan can provide for either a two-and-half month grace period or a carryover of funds up to $610 in 2023. Any unused funds are returned to the employer at the end of the plan year."

Contribution limits: For 2023, if an employee is married, each spouse may contribute up to $3,050 to his or her own employer-sponsored FSA, even if both participate in the same account sponsored by the same employer. An employer plan may further limit the contributions.

3. Health reimbursement arrangement (HRA)

Employees can use these employer-owned accounts for specific medical expenses, such as deductibles, copayments, coinsurance, dental or vision. Contributions are made solely by the employer.

Contribution limits: The amount available in this account is set by the employer. The employer has the option to keep unused funds at the end of the plan year or roll them into the next year. There is no minimum or maximum amount.

___

(c)2022 The Buffalo News (Buffalo, N.Y.)

Visit The Buffalo News (Buffalo, N.Y.) at www.buffalonews.com

Distributed by Tribune Content Agency, LLC.