Annual Enrollment Is Coming!
With Annual Enrollment around the corner, now is the perfect time to learn about Spending Accounts and how they can benefit you and your family.
Knowledge Is Power
When employees understand their Spending Account options, they’re more likely to:
- Make informed choices during Open Enrollment.
- Plan ahead and talk with a spouse or partner about financial strategies.
- Save money on eligible expenses using pre-tax dollars.
Health Savings Accounts (HSA): The Triple Tax Advantage
A Health Savings Account (HSA) is a tax-advantaged savings account available to individuals enrolled in a High-Deductible Health Plan (HDHP).
Triple Tax Advantage
- Pre-tax Contributions Contribute money before taxes—or deduct it from your taxable income.
- Tax-Free Growth Interest and investment earnings grow tax-free.
- Tax-Free Withdrawals Funds used for qualified medical expenses are withdrawn tax-free.
2026 IRS Contribution Limits
- Self-only: $4,400/year
- Family: $8,750/year
- Catch-up (55+): $1,000/year
Pairing & Maximizing Your Spending Accounts
Pairing Accounts for Greater Savings
- HSA + LPFSA
If you’re enrolled in a Health Savings Account (HSA), you may also qualify for a Limited Purpose FSA (LPFSA).- Use the LPFSA for dental and vision
- Save your HSA for medical
- Result: More tax savings by reducing taxable income across both accounts.
Dependent Care FSA (DCFSA)
Available regardless of HSA or FSA enrollment.
- Covers eligible expenses for child or dependent care.
- Reduces taxable income, helping with work-related care costs.
Changing Between FSAs and HSAs: What to Know
Important Transition Rule
If you’re switching from a Healthcare FSA to an HSA in the new plan year:
- Unused FSA funds must be spent before your HSA can take effect.
- This is due to IRS rules preventing dual use of both accounts for general medical expenses.
Easier Transition with LPFSA
If your employer offers a Limited Purpose FSA (LPFSA):
- You may be able to transfer unused FSA funds to the LPFSA.
- This allows you to:
- Start your HSA right away.
- Continue using leftover funds for dental and vision expenses.
For Employers:
Work with your Benefits Broker to:
- Review current Spending Account policies
- Explore updates for the upcoming Open Enrollment
- Ensure compliance and optimize employee benefit offerings
- Confirm rollover, grace period, and contribution rules.
For Employees
Talk to your HR or Benefits Team to:
- Understand available Spending Accounts
- Get help with HSA vs. FSA choices
- Clarify rollover options and plan limits
