Content courtesy of WebCE
| Contribution and Out-of-Pocket Limits for Health Savings Accounts and High-Deductible Health Plans | |||
|---|---|---|---|
| 2022 | 2021 | Change | |
| HSA contribution limit (employer + employee) | Self-only: $3,650 Family: $7,300 | Self-only: $3,600 Family: $7,200 | Self-only: +$50 Family: +$100 |
| HSA catch-up contributions (age 55 or older) | $1,000 | $1,000 | No change |
| HDHP minimum deductibles | Self-only: $1,400 Family: $2,800 | Self-only: $1,400 Family: $2,800 | No change No change |
| HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums) | Self-only: $7,050 Family: $14,100 | Self-only: $7,000 Family: $14,000 | Self-only: +$50 Family: +$100 |
| Comparison Chart | |||
|---|---|---|---|
HSAs | FSAs | QSEHRAs | |
What is it? | An individual custodial account designed to help individuals (and their families) save and pay for qualified health care services and medical expenses | A voluntary employer-provided benefit to help employees (and their families) save and pay for qualified health care services and expenses | A plan that small employers can set up to reimburse employees for qualified medical expenses incurred |
How is the plan made available? | Through an employer or as a health coverage option personally arranged by an individual | Only through an employer; the employee has the option to participate in the plan or not | Only through a small employer (i.e., an employer having fewer than 50 employees) |
Are there any eligibility requirements? | The individual must first be covered by a qualified high-deductible health care plan (HDHP) through either a group plan or as a personal plan; the HDHP coverage can be either single or family coverage. With only limited exceptions, the individual cannot be covered by any other health plan. | The individual must be an employee of the employer that sponsors the plan. The FSA is usually offered in conjunction with other employer-provided health insurance, though enrollment in the other insurance plan is not required for participation in the FSA. | The sponsoring employer must be a small employer. and, as a general rule, all full-time employees must be offered the opportunity to participate A participating employee must have minimum essential insurance coverage. |
Can self-employed individuals set up the plan? | Yes | No | No |
Who can contribute to the plan? | The individual HSA owner, an employer, and family members | The employer and the employee | Only the employer |
How are funds contributed? | The individual deposits money into the account as either payroll deductions under a salary reduction agreement or as direct payments to the HSA custodian. | The employee signs a salary reduction agreement, and the employer directs the amount the employee elected into the FSA. | The employer makes a benefit allowance available to eligible employees, up to the maximum per-employee amount allowed for the year; benefits are paid as reimbursementsto the employee for documented qualifying costs |
Who owns the money in the account? | The individual | The employer | The employer |
What services or expenses can the plan pay for? | Those specified in IRC Section 213(d) as eligible expenses that can be claimed for the medical expense tax deduction | Those specified in IRC Section 213(d) as eligible expenses that can be claimed for the medical expense tax deduction, and allowed by the plan | Those specified in IRC Section 213(d) as eligible expenses that can be claimed for the medical expense tax deduction, as well as premiums for health insurance coverage |
Can plan funds be used to pay for other, nonqualified expenses? | Yes; funds can be withdrawn by the participant for any reason; however, if they are not for qualified medical expenses, they will be subject to tax and, if the participant is younger than age 65, a 20 percent penalty applies. | No; any funds used to pay for nonqualified expenses must be paid back to the FSA by the participant. | No; the plan only reimburses employees for documented qualified expenses. |
Can funds be used to pay health insurance premiums? | Generally, no. The funds cannot be used to cover the premiums for the HDHP, though they can be used to cover premiums for LTC insurance (limited), insurance coverage while unemployed, COBRA coverage, and Medicare. | No | Yes |
Can family members be covered? | Yes; funds can be used to cover qualifying medical expenses of spouses, tax-dependent children, and tax-dependent adults. | Yes; funds can be used to cover qualifying medical expenses of spouses, children, and tax-dependent adults. | Yes, the employer can choose to provide reimbursements for costs incurred by an employee’s family. |
What is the tax treatment of participant contributions? | Participant contributions made through pre-tax payroll deductions are not subject to income or payroll taxes; participant contributions made directly to the HSA are tax deductible by the participant. | Participant contributions are made through payroll deductions on a pre-tax basis; they are not subject to income or payroll taxes. | There are no participant contributions; the sponsoring employer can take a tax deduction for the amount of reimbursements made to participating employees |
What is the tax treatment of funds taken from the plan for qualified medical expenses? | They are tax free to the participant. | They are tax free to the participant. | The reimbursement of qualified costs paid to the participant are tax free to the participant. |
Can unused funds for one year be rolled over to the next year? | Yes | Generally, no; however, the plan may permit up to $500 of unused funds to be rolled over from one plan year to the next. | Yes; however, the benefit provided to an employee for any year cannot exceed the statutory maximum in place for that year. |
Can the participant keep the plan funds if employment is terminated? | Yes | No | No |
When are plan funds available to the participant? | As soon as the HSA account has been funded | As soon as the FSA plan has been established, the participant has elected an amount to contribute, and after eligible expenses have been incurred | As soon as the amount is presented for reimbursement after the cost has been incurred (provided the employee has met the eligibility requirements) |
Do the funds in the plan earn interest for the participant? | Yes. The participant determines the investment vehicle that supports the HSA; investment interest or earnings are reinvested in the account, accumulate tax free, and can be taken by the participant. | No | No |
How much can a participant contribute? | The maximum participant contribution is limited by law and subject to change every year. (For 2022, the maximum contribution amount is $3,650 for individual HDHP coverage and $7,300 for family HDHP coverage.) | The maximum participant contribution is determined by the employer but cannot exceed $2,500 (indexed) per year. (For 2022, the indexed amount was $2,850.) | The participant cannot contribute any amount to a QSEHRA. |
Are catch-up contributions allowed for participants age 55 and older? | Yes | No | No |
Can the participant also have coverage with another plan? | Generally, no; the participant must be enrolled in an HDHP and cannot be covered by other insurance that provides for the same coverage as the HDHP (though limited other coverage is available). | Yes | Yes, minimum essential coverage is required for each participant (though it cannot be provided by the QSEHRA sponsor). |
How much of the plan’s funds is available to the participant at any time? | An amount equal to what was contributed to the plan up to that point (less any amounts that were previously withdrawn) | The full amount of the participant’s elected salary reduction for the year plus any employer contribution (less any amounts that were previously withdrawn) | The amount presented for reimbursement after the cost has been incurred (provided the employee has met the eligibility requirements) |
Can a participant change or stop plan contributions at will? | Yes | Generally, no; the participant’s election to participate in the plan through payroll deductions is irrevocable for the plan year unless the participant faces a qualifying event. | Not applicable |
Can the participant cash out the account at any time? | Yes, though the cash out will be subject to tax and potential penalty if it is not matched to qualified medical expenses. | No | No |
Is the plan subject to COBRA? | No | Yes | No |
