Flexible Savings Accounts (FSA) and Health Savings Accounts (HSA) help you save for qualified medical expenses. However, the two vary in terms of benefits and eligibility.
Which account is right for you?
Health Savings Account (HSA)
The HSA is not for everyone. You’re eligible only if you:
- Are enrolled in the High Deductible Health Plan (HDHP)
- Can't be enrolled in a second non-HDHP medical plan including Medicare, Medicaid, or Tricare.
- Can't be claimed as a dependent on someone else's tax return.
- And your spouse are not enrolled in a Healthcare FSA – only a Limited Purpose FSA.
A Health Savings Account (HSA) is an easy way to pay for healthcare expenses that you have today and save for expenses you may have in the future.
If you currently have an HSA with another bank and would like to transfer or rollover the funds, please review the below HSA Transfer Request Form.
See IRS Publication 502, “Medical & Dental Expenses” for a complete list of expenses covered by your HSA.
How the High Deductible Health Plan with HSA Works?
Employees enrolling in the HDHP will receive an HSA contribution from Alto Pharmacy ($450/year if enrolling by yourself, $900/year with Spouse or Child and $1,200/year if enrolling with Children or Family) to help offset your annual deductible, cover qualified medical/dental/vision expenses or save for the future. The annualized contributions will be deposited based on your payroll frequency. Contributions to your HSA are pre-tax contributions, which lower your taxable wages. *The HSA employer contribution is split up over 26 pay periods. If you start after January 1st, the employer HSA contribution is pro-rated amongst the remaining pay periods in the year.
Your HSA will automatically open HealthEquity when you enroll in the HDHP. Unused funds roll over every year and are owned 100% by you; unused HSA funds do not return to Alto Pharmacy, and they can be invested in several mutual funds or a brokerage account.
You can contribute pre-tax funds to your HSA in addition to Alto Pharmacy’s contribution up to the IRS annual limit. The IRS maximum HSA contribution for 2025 is $4,300 for individuals, $8,550 for families. If you are a new hire and enroll in the HDHP with an effective date before 12/1, you can make a full year contribution for that year. However, you must then stay enrolled in an eligible HDHP for the entirety of the following calendar year or risk a tax penalty.
Your HSA account is set up automatically after you enroll.
Four reasons to love an HSA
01
Tax-free. No federal tax on contributions, or state tax in most states. Withdrawals are also tax-free as long as they’re for eligible healthcare expenses.
02
No “use it or lose it.” Your balance rolls over from year to year. You own the account and can continue to use it even if you change medical plans or leave the company.
03
Use it now or later. Use your HSA for healthcare expenses you have today or save it to use in the future.
04
Boosts retirement savings. After you retire, you can use your HSA for healthcare expenses tax-free, or for regular living expenses, taxable but no penalties.
Health Care Flexible Spending Account (FSA)
You don’t have to enroll in one of our medical plans to participate in the healthcare FSA. However, if you are enrolled in the HDHP plan and you contribute to an HSA, you can only participate in the “Limited Purpose” FSA for dental and vision expenses.
Set aside healthcare dollars for the coming year
- A healthcare FSA allows you to set aside tax-free money to pay for healthcare expenses you expect to have over the coming year
How health care FSA works
- You estimate what you and your family’s out-of-pocket costs will be for the coming year. Eligible expenses include office visits, surgery, dental and vision expenses, prescriptions, even eligible drugstore items.
- You can contribute up to $3,300, the annual limit set by the IRS. Contributions are deducted from your pay pretax, meaning no federal or state tax on that amount.
- During the year, you can use your FSA debit card to pay for services and products. Withdrawals are tax-free as long as they’re for eligible healthcare expenses.
- The plan year runs from January 1,2025 - December 31, 2025. FSA plans follow the basic rule of “use it or lose it.” However, the Medical FSA plan has a $660 rollover provision from one plan year to the next. All out-of-pocket claims incurred during the plan year must be submitted within 90-days from the end of the plan year. All other eligible charges can be paid for with the provided debit card.
Dependent Care FSA
Dependent Care FSA —up to $5,000 per year tax-free
A Dependent Care Flexible Spending Account (FSA) can help families save potentially hundreds of dollars per year on day care. This program is administered by HealthEquity WageWorks.
Here's how the Dependent FSA works
You set aside money from your paycheck, before taxes, to pay for work-related day care expenses. Eligible expenses include not only child care, but also before and after school care programs, preschool, and summer day camp for children under age 13. The account can also be used for day care for a spouse or other adult dependent who lives with you and is physically or mentally incapable of self-care.
If married, it is important to remember that to be eligible for this benefit a few additional things must be true: 1) your spouse is also employed, 2) your spouse is a full-time student, or 3) your spouse is incapable of self-care.
You can set aside up to $5,000 per household per year. You can pay your dependent care provider directly from your FSA account, or you can submit claims to get reimbursed for eligible dependent care expenses you pay out of pocket.
Estimate carefully! You can’t change your FSA election amount mid-year unless you experience a qualifying event. Money contributed to an FSA must be used for expenses incurred during the same plan year. Unspent funds will be forfeited.
If you want to participate in the FSA for 2025, you must ACTIVELY enroll!
Commuter Benefits
As an employee of Alto Pharmacy, you are able to set aside funds pre-tax to use for eligible public transportation and parking expenses that are associated with your commute to and from work. The maximum that you can contribute pre-tax each month is $325 for public transportation and $325 for parking. These elections will continue to roll over month-to-month.
Disclaimer: This presentation is to provide a summary of Alto Pharmacy employee benefit programs. Should any discrepancy arise, please refer to actual plan documents which supersede this presentation. Once enrolled, you will receive a Combined Evidence of Coverage and Disclosure Form that explains the exclusions and limitations, as well as the full range of covered services of your plan, in detail.