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CareFirst Gives Consumers Tips for End of Year Health Spending

Changes to Flexible Savings Accounts (FSAs) and Health Savings Accounts (HSAs) slated for 2013

Baltimore, MD (November 29, 2012) - With the New Year approaching, health care consumers who hold Flexible Savings Accounts (FSAs) and Health Savings Accounts (HSAs) may be thinking of how to spend their money in 2012, while planning for changes to both programs in 2013.

Consumers may need to spend their money on eligible medical expenses by Dec. 31 or risk losing the balance. Regardless of whether the consumer has an FSA or HSA, the dollar amount that can be contributed and held in either account next year will change in January.

Consumers must be able to distinguish which type of medical spending account they have to be certain they follow correct guidelines for each.

A Flexible Spending Account allows consumers to set aside pre-taxed money for eligible expenses, such as prescription drugs and chiropractic treatment, that can be spent on the account holder or dependents. There are two types of FSAs— a health care account and a dependent day care account. A health care account reimburses the consumer for out-of-pocket medical, dental, prescription and vision services, such as deductibles and copays. A dependent day care account reimburses the consumer for expenses such as day care, after-school programs and adult day care.

For an FSA, the consumer must determine the contribution during open enrollment season and any funds left on the account at the end of the year will be forfeited. While the length of time varies among employers, the Internal Revenue Service (IRS) allows a grace period of 2 ½ months into the following plan year to spend funds.

For plan years that begin on or after Jan. 1, 2013, the IRS has reduced the maximum annual contribution for Health Care Flexible Spending Accounts from $5,000 to $2,500. The limit for Dependent Care FSAs will remain at $5,000.

A Health Savings Account is a tax-free savings account that allows consumers to put aside pre-tax income, earn interest on the savings, and use the money for eligible health care expenses, such as insurance premiums and surgical procedures. Unlike an FSA, any money the consumer doesn’t use by the end of the year stays in his or her account for future use.

In 2013, the HSA maximum contribution has increased from $3,100 to $3,250 for a self-only HSA and from $6,250 to $6,450 for a family.

The money in a HSA always belongs to the account holder and is entirely portable – if the consumer is a member of an employer-based plan, this means the money goes with the consumer even if he or she leaves the employer. HSA money can also be “cashed out” at any time; however, it is subject to a 20 percent penalty if the consumer closes the account before turning 65.

Other Qualified Medical Expenses Include:

  • Diabetic care;
  • Acupuncture;
  • Hearing aids;
  • Physical therapy;
  • Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it;
  • Is insulin;
  • Psychiatric care; and
  • Transplants.

“If you still have money left in your accounts, you can still use it to buy items such as contacts and eye glasses,” said Mike Felber, CareFirst Senior Vice President of Sales. “It is also a great time to consider things like Lasik surgery or regular dental cleaning and getting fillings or crowns. If you have to travel for a medical treatment, the cost of the trip may also be allowable expense.”

For a complete list of eligible medical expenses, visit the IRS website.

About CareFirst
In its 75th year of service, CareFirst, an independent licensee of the Blue Cross and Blue Shield Association, is a not-for-profit health care company which, through its affiliates and subsidiaries, offers a comprehensive portfolio of health insurance products and administrative services to 3.4 million individuals and groups in Maryland, the District of Columbia and Northern Virginia. In 2011, CareFirst contributed $51 million to community programs designed to increase the accessibility, affordability, safety and quality of health care throughout its market areas. To learn more about CareFirst BlueCross BlueShield, visit our web site at or follow us on Twitter:

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