Using FSAs and HSAs for prescriptions
Many Americans have an HSA or FSA as part of their health insurance. These accounts act like medical savings accounts and can be a great addition to your health care. FSAs and HSAs can help pay for anything from dental services to over the counter drugs. In fact, using an FSA or HSA to pay for your prescriptions can be a wise way to use your resources and save on out of pocket spending. Before diving into how to use your FSA or HSA to pay for medications, let’s explain the difference between the two accounts.
HSA vs. FSA: What’s the difference?
Both HSAs and FSAs are pre-tax money accounts designed to help people with health insurance pay for qualified medical expenses. These expenses can range from deductibles to prescription costs. Most of these accounts come with a physical debit card to pay for these expenses. While both are pre-tax, there are some differences between the two accounts.
What is an HSA?
HSAs, or Health Savings Accounts, are available to those with high deductible health plans. This money is tax deductible and has no expiration date. This means that money contributed to an HSA rolls over every year, making it an excellent option for younger people with a high deductible health plan looking to plan for the future. You can change how much you contribute at any point during the year, but contributions must stay under $3,500 for individuals and $7,000 for families as of 2020. If you ever leave your company, the money contributed to your HSA will still be yours and will travel with you as you change jobs.
What is an FSA?
FSAs, or Flexible Spending Accounts, are only available as part of benefits packages from an employer. This means an individual can’t get an FSA on their own. Like an HSA, money contributed to an FSA is tax free. But unlike an HSA, the money contributed to an FSA must be used by the end of each year. Employees decide how much they want to contribute to the FSA during open enrollment and get that money as a lump sum right away. If you leave your job halfway through the year, you’ll most likely lose any money left in the FSA.
How to use your HSA or FSA for prescriptions
Both FSAs and HSAs can be used on qualifying medical expenses. Prescription medications and over the counter drugs are a large part of these qualifying expenses. When you start your HSA or FSA, you’ll get a physical debit card. This debit card can be used to pay for a variety of prescriptions or even over-the-counter medical supplies. You can use this card to pay in person or when you order online or on the phone.
Thanks to the pre-tax savings, you’re saving money when you use your HSA or FSA to pay for medications. When you combine coupons from Optum Perks with your HSA or FSA, you save even more on medications. Even if your prescription isn’t covered by insurance! As long as your medication is a qualified medical expense, you can use your HSA or FSA with an Optum Perks coupon to save money.
You’d be surprised by the wide range of medications and supplies covered as qualified medical expenses:
- Heartburn medication
- Allergy medication
- Cold and flu medication
- Visit the IRS for a full list of qualifying expenses
So before you head to the pharmacy, be sure to check the list of qualifying medical expenses to see if you can use your HSA or FSA card, then visit perks.optum.com to find even more savings on your medications.