Kiplinger Personal Finance: FSA and HSA Updates | business news

If you put pre-tax money into accounts to pay for medical or dependent care expenses, here are some changes to be aware of for 2022.

More time to use flexible spending accounts: If you’re worried about losing funds you’ve set aside in a pre-tax flexible spending account for health or dependent care, maybe because you put off doctor appointments or because your kids were home during the pandemic, relax.

Legislation enacted in response to modified COVID-19 rules for FSAs. Instead of losing those funds at the end of the year, employers can modify their plans to allow workers to carry over unused funds through 2022.

Typically, your employer may allow you to roll over up to $550 of unused funds into a health care FSA for an additional 2½ months (that is, through March 15 of the following year), and you may not roll over any dependent care FSAs. money.

But for 2021, employers can grant a 12-month grace period (until December 31, 2022) for both types of flex accounts. That’s particularly significant for dependent care spending accounts because Congress allowed FSA holders to save up to $10,500 of pre-tax wages in 2021, above the standard $5,000 limit.

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If your employer doesn’t provide a grace period, keep in mind that exhausting unused funds in a health care spending account is easier than exhausting a dependent care FSA. You can pay for at-home COVID-19 testing kits, hand sanitizer, and masks. You can also use FSA funds to buy over-the-counter medications, such as pain relievers, cough suppressants, and antihistamines.

For a complete list of eligible items, visit If you’re not sure if your employer offers a grace period, contact your human resources department as soon as possible.

Higher contribution limits for health savings accounts: If you have a health savings account (HSA), you don’t have to go to Walgreens in the middle of the night, because there is no deadline to use the funds in the account.

But this is a good time to find out how much you can afford to spend next year.

For 2022, the annual HSA contribution limit for individual coverage increases from $3,600 to $3,650. If you have family coverage, the limit goes up from $7,200 to $7,300. If you’re age 55 or older by the end of 2022, you can contribute an additional $1,000 in “catch-up” contributions.

To qualify for an HSA, your 2022 health insurance policy must have a minimum deductible of $1,400 for individual coverage or $2,800 for family coverage.

Didn’t you max out your 2021 HSA contributions? You have until April 15, 2022 to add to the account.

As with a health care FSA, you can use HSA funds for personal protective equipment, such as masks and COVID-19 test kits, as well as other out-of-pocket medical expenses. Generally, you can’t contribute to a health care FSA and an HSA at the same time.

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