Do I Need to Use a Third Party Administrator for My HSA?

Running a business of any size can be difficult, especially with how fast the digital economy moves these days. You already have a lot on your mind, and managing benefits is often just one more thing to worry about. This becomes particularly challenging when you have a large workforce that is spread out across the country or even the world. Different states and countries have different laws and regulations, and keeping up with everything can be a chore.

For some business owners, the solution to these problems is to hire an HR team to handle tasks like health savings account (HSA) management. For others, it may make more sense to go with a third party administrator (TPA) to handle HSA benefits. Which one you choose is up to you, but there are pros and cons to each approach.

Why Choose a TPA?

An HSA TPA can take a lot of the burden off of your shoulders when it comes to managing plans, accounts and benefits. Your HSA TPA acts as an advocate for your company and its employees so that you can focus on other important tasks.

A TPA can also take care of other benefit programs that you provide to employees, including mental health benefit programs and return-to-work programs. Essentially, your TPA functions as an all-in-one administration team for medical benefits.

The Benefits of Handling Your Own HSA Administration

If you choose to keep your benefits administration in-house, you’re going to have much more control over how things are managed. Of course, this means more work for you and your team, but some business owners find this trade-off worth the extra hassle.

Employees may also prefer to deal one-on-one with your company through HR to handle questions and concerns about HSA and other benefits. Working through a third party often means more phone calls, emails and other communications bouncing back and forth. In-house benefits administration cuts out a lot of the bureaucracy and provides a more efficient route for your employees to gain access to the information they need most.

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What Is a Dependent Care FSA?

It’s no secret that child care is expensive. If you’re looking for ways to stretch your budget to cover the cost of child care, a dependent care FSA can help.

What is a dependent care FSA?

A dependent care FSA is a pre-tax benefit account you can use to pay for eligible dependent care services. For example, you can use the funds to pay for preschool, daycare, summer camp, and before or after school programs. You can even use the funds in a dependent care FSA to pay for adult daycare in eligible situations.

To use a dependent care FSA for your child, he or she must be under the age of 13. To use the funds for adult dependent care services, the adult must be a physical or relative that lives in your home and is physically or mentally incapable of caring for themselves.

Benefits of a dependent care FSA

The primary benefit of a dependent care FSA is that any money you set aside in the account is tax-free. That means you reduce the amount of your income that is subject to taxes by contributing pre-tax dollars to your account. Additionally, according to the The Federal Flexible Spending Account Program (FSAFEDS), you can save an average of 30 percent on dependent care services like daycare or after school programs.

One of the main concerns people have about a dependent care FSA is the burden of submitting required documentation and getting reimbursed for the dependent services. Although you have to cover the cost of dependent care services upfront, with a dependent care FSA, it’s easy to get reimbursed for those expenses. You can easily submit and view the status of claims online, look up eligible expenses, and check your account balances. You can even have the money directly deposited into your checking account for fast and hassle-free repayment.

Dependent care FSA contribution limits

Although this type of benefit account may sound like it’s a perfect solution for you, you should also note that some dependent care FSA contribution limits apply. A dependent care FSA lets you set aside up to $5,000 per household to pay child care expenses for kids under age 13 while you and your spouse work or look for work. If you are confident that your child care expenses will meet or exceed dependent care FSA contribution limits, the FSA might be an ideal option for you and your family.

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Long-Term Care and Health Savings Accounts

Planning for long-term care isn’t something that most people like to think about, but failing to plan for the potential need for long-term care can lead to some difficult consequences. The fact is that, as life expectancy continues to grow in the United States, more and more people are going to need long-term care.

This type of care may be provided in a nursing home, a traditional hospital or at home, and it may last months, years or even longer. Even if you’re able to pay for initial fees, are you prepared to continue paying for care that may last for years or decades?

Does Insurance Cover Long-Term Care?

Private insurance may or may not cover long-term care depending on your policy and provider. Some insurance providers offer long-term care as an add-on benefit, but most do not provide this coverage as a core offering of most plans.

You may also think that Medicare provides coverage for long-term care since the program is designed for seniors, but Medicare does not have a long-term care benefit either. Original Medicare does provide hospital care under Medicare Part A, but this is limited to 90 days per benefit period unless you have lifetime reserve days to utilize.

Using a Health Savings Account

Because private insurance and programs like Medicare are limited in their approach to long-term care, you might consider turning to a health savings account (HSA) to pay for this type of care. Perhaps you’ve already looked into the best HSA for investing to grow your wealth, but you might want to also take a look at what long-term care facilities accept HSA payments for care in your area.

After all, the best HSA for investing isn’t necessarily the best HSA for handling things like long-term care needs. You’re encouraged to examine your existing plan now to ensure your contributions are working for you and not against you. While many long-term care facilities accept HSA payments, you will also want to make sure that utilizing an HSA for this type of care is in line with financial and healthcare regulations in your state.

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Who Can You Cover With Your HSA?

Saving for the future is easier when you take advantage of the benefits that a health savings account provides. Your tax-free investments earn interest the longer they stay in the account, and you can use the money without having to pay taxes on it as long as you spend it on IRS-approved health care items and services. This HSA account FAQ can help you determine who is covered when you need to pay a health expense.

Does Our Tax Status Impact My Spouse?

Your spouse is covered under your HSA even if you file your taxes separately. You’ll also find it helpful to know that you can use your HSA funds on your spouse if they have a separate health account. Keep in mind, however, that you and your spouse have a shared contribution limit even if you have individual HSA accounts.

Can I Use HSA Funds for My Senior Parents?

If your parents lived with you during the year and you provide for the majority of their needs, then you can also use your HSA funds to help with the cost of their health care. In this instance, your senior parents fall under the guideline of being a qualified dependent. This can also apply to other people in your home such as an aging grandparent.

When Are My Children Covered?

Changes in a person’s family dynamics frequently lead to one of the most popular HSA account FAQ posts. Adult children who have moved out of your house may still be considered a qualifying dependent if they are covered under your health insurance. You can also claim your children even if they are claimed on your ex-spouse’s tax return. Step-children also fall under the category of being a qualified dependent.

Many people are unaware that they can use their HSA funds for people who are not their direct children or dependent spouse. Knowing when and how you can use your funds helps you to rely on them when you face health care expenses while being able to take advantage of those important tax-saving benefits.

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Though we may not give it much thought, most of us are multitasking throughout our financial lives. Even though retirement may be the long-range goal, it's a good bet you're knocking off scores of smaller financial jobs along the way--paying off student loans and home mortgages and socking away funds for college, to name some of the biggies read more

How Many HSAs Can I Have?

The financial benefits offered by a health savings account are tremendous, so you understandably want to maximize those benefits. Are you wondering, "Can I only have one health savings account for my family?" Generally, the rule is one account per qualified individual, but there are some nuances that you need to know about.

For Married Couples

When you ask, "Can I have more than one health savings account for my family?", be aware that one spouse can have a family account or each spouse can have his or her own HSA. The total family contribution per year is $7,000. If each spouse maintains an individual HSA, the individual contribution limit would apply. This limit is $3,500 per year. Regardless of whether one family account is in place or the spouses each have their own HSA, all eligible family members can use the funds.

For Unmarried Individuals

There are several reasons why an individual may prefer to have more than one account. For example, an HSA custodian may be automatically selected by your employer, and your employer may contribute partially to that specific account. However, you may prefer to use another custodian because it offers more investment options. This is only one of many situations when it could make sense to have more than one HSA account. You are permitted to have multiple accounts, but your annual contribution limit applies. This means that you can contribute up to $3,000 per year as an individual across two separate accounts if you prefer.

Are you interested in opening a new HSA? Your first step is to compare the different fees and investment options offered by various custodians. Then, adjust your finances so that you can max out your HSA contributions and enjoy the full benefits that an HSA provides.

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