How to Use Your HSA or FSA for Concierge Medicine
When it comes to financial assistance with healthcare, most of us appreciate any break that spares us a few dollars. So with concierge medicine, just like with any traditional medicine, you want to find every path toward possible savings. With that said, one resource you may want to consider is a spending account.
There are two main types of accounts, Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs), that let you set aside earnings into a fund for “qualified medical expenses.” You might be surprised by the number of items that category covers — everything from insurance deductibles and copays down to supplies such as bandages, crutches, and contact lenses. With most accounts, you receive a debit card that you can use for these qualifying expenses.
If you’re wondering what makes an FSA or HSA better than a traditional savings account, the answer is taxes. Your earnings move into these accounts without being taxed as income, and they also get protected from unemployment, Social Security, and Medicare taxes. This helps you in two ways. It preserves more money for the account and, because it doesn’t count as taxable income, it potentially keeps your income in a lower tax bracket.
If that combination of tax relief and health care savings sounds good to you, we want to give you a primer on the spending accounts and how to use them with your concierge practice.
The FSA: A Use-or-Lose Fund for Medical Expenses
The “f” in “FSA” stands for “flexible,” but it might as well stand for “fast.” What you need to know about this account is that you can quickly get, but also quickly lose, your access to its funds.
With an FSA, you can invest roughly $2,700 of untaxed income into a bucket that covers life expenses. There are two types of FSAs, a Dependent Care Flexible Spending Account, which can be spent on work-related childcare, and a Health Flexible Spending Account, which goes toward qualified medical expenses.
One perk to the FSA is how soon your funds become available. You have to enroll for the program and set your contribution amount during the fall enrollment period, but then you have access to the entire budget as of January 1 — even if you deposit into your account throughout the year. It leads to a delicate situation if you switch jobs midyear and you already spent the money. Your employer, who owns the account, could try to recoup the balance, but we don’t often hear of that happening.
The drawback to an FSA is its limited protections for job transitions and yearly rollover. If you leave or lose your job midyear and you haven’t used your FSA balance in full, you likely forfeit access to it, unless you qualify for continuation through COBRA. Check with your business, though, because guidelines vary from one company to the next. You also can’t rollover more than $500 of unspent balance from one year to the next. Again, check with your employer on details, but generally speaking, it’s a use-or-lose system.
The HSA: More Ownership Over Your Medical Expense Account
Like an FSA, an HSA covers all qualified medical expenses. But the protections and limitations of this account are very different, so make sure you’re aware of its pros and cons.
The first thing to know is that not everyone is eligible for an HSA. It’s available only to people who use a high-deductible health insurance plan, one with an annual deductible of $1,350 or more.
But if you qualify and you choose an HSA, the account is entirely yours, not your employer’s. This means there are no concerns about job transitions or yearly rollover limiting your access to the balance. It’s yours to use when you need it. If you’re age 65 and older, you’re even allowed to withdraw funds to pay non-medical expenses, but you’re going to owe income tax on your withdrawal. If you’re not yet 65, you’re able to do the same, but you’re stuck with additional fees.
Another difference between the spending accounts is that an HSA has a higher contribution limit. People who file taxes independently can invest $3,550, while married couples who file jointly can double that. Unlike an FSA, which requires you to set a contribution total during the enrollment period, an HSA total can be altered at any time.
That’s a lot of points in favor of the HSA, but what’s the drawback? You can’t outspend your investment. Instead of accessing the full contribution amount as of January 1, you can grab only what you’ve accumulated in your account.
How FSAs and HSAs Work with Concierge Medicine Costs
These spending accounts cover such a wide-ranging list of medical expenses. The best part, at least in our minds, is that they work just as well with concierge care as they do with traditional physician practices. So you can have the dedicated care of a concierge office while enjoying the tax benefits of your spending account.
The general rule to remember is that, if insurance covers an expense, so does a spending account. That’s true with traditional practices and with concierge care, too. Any copay, prescription, or out-of-pocket concierge expense that you can bill to your insurance company should be FSA- and HSA-eligible.
An advanced physical (sometimes called an executive physical) could potentially be applied to an FSA or HSA. Some form of physical is commonly included as part of a concierge membership, but many of the more medically advanced screenings require an out-of-pocket payment.
Depending on your individual plan, these costs may be able to be applied to your FSA or HSA. Always check with your plan to ensure you have a clear understanding of what kind of expenses can be applied to your FSA or HSA.
Your concierge membership, however, can’t be covered by your FSA or HSA account, just like it can’t be billed to most insurance policies. That cost is yours to address through other channels, like personal savings and employer contributions. But when it comes to treatment expenses, use your FSA or HSA toward concierge medicine as you would toward any other practice.
Ask for Receipts
While you cannot use your FSA or HSA funds to cover the cost of your membership, there may be services included as part of your membership that are reimbursable. Let’s look at a PartnerMD-specific example to illustrate.
Your membership fee for PartnerMD includes unlimited sessions with a certified health coach. When you have an appointment with your coach, neither you nor your insurance will be billed because you’ve paid for these services as part of your membership.
Depending on your FSA or HSA plan, health coaching could be a covered expense. Therefore, when you use the service, PartnerMD can issue you a receipt for the health coaching visit that can be submitted for reimbursement to your FSA or HSA. Keep in mind that there are some limitations. For example, a coaching visit may require certain elements to qualify.
If you were to receive the maximum amount of reimbursement for coaching visits, that’s $900 of your annual membership fee that could be applied to your FSA or HSA.
Because each concierge practices offer different benefits and perks, be sure to ask about any reimbursable services that may be included within your membership fee. Then ask for receipts when taking advantage of these benefits.
Learn More About Spending Accounts and Concierge Care
We all want health care to be affordable and high-quality. FSAs and HSAs are a viable option for you to minimize the cost of having great dedicated care through concierge medicine.
As we talk about these accounts, all of the standard disclaimers apply. Policies can vary. Check your specific plan for details.
But you now know the general rules of what expenses these accounts cover.
- If insurance covers it, a spending account likely does too.
- Concierge memberships can’t be covered, but treatment can.
- Ask about receipts for treatment services, like health coaching, that are built into your membership, because they may be applied to your FSA or HSA.
Is there more you want to know about concierge costs and services? We’re here to help. We recommend that you look through our free guide to Understanding Concierge Medicine to learn more about potential savings and everything concierge medicine has to offer.