How do I use an HSA/FSA to pay for Kip therapy?
HSAs (Health Savings Accounts) and FSAs (Flexible Spending Accounts) are tax-advantaged savings accounts that allow you to use pre-tax money for your therapy sessions. This way, you get the full value of your dollar (no taxes) and you reduce your income (lower taxes overall). You can pay for Kip therapy with these HSA/FSA funds.
Both HSAs and FSAs have benefits that can make managing your out-of-network mental health expenses easier throughout the year. Below, we compare the pros and cons of the two accounts, answer common questions, and outline the process of using HSA/FSA funds to pay for Kip therapy.
Pros: You can put more money into an HSA since the individual limit is $3,400 per year (as of 2017), and these funds rollover to the next year if you don’t use them all. You can also change how much you contribute to the account at any point during the year.
Cons: HSAs have more eligibility restrictions. You must be enrolled in a high deductible health plan, cannot be claimed as someone’s dependent, and cannot be enrolled in Medicare.
Pros: You can put up to $2,600K (individual limit) into an FSA per year and the money is taken out of your paycheck in portions throughout the year. You decide how much to put into your FSA during open enrollment, but that full amount gets taken out pro-rata throughout the year.
Cons: Calculate wisely! Only $500 of your unused FSA funds roll over to the following year, so you lose any leftover money that you don’t use within the year. You can use this guide from NerdWallet to help you decide whether to start an FSA or not.
- How much can I save with HSA/FSA funds? You save whatever you would have lost in taxes on the amount you spend, so 10–40%, depending on your tax bracket. Assume your tax bracket is 25%, you make $40 per hour, and you pay $165 for each Kip therapy session. With an HSA/FSA, you would save $41 per session that normally would have gone to Uncle Sam as taxes on your income.
- Which account should I choose? It’s best to open an HSA (if you qualify), simply because the limits are higher and you can carry over your contributions from employer to employer and year to year.
- How much should I contribute? Begin calculating how many Kip therapy sessions you anticipate booking, how much of the cost your company will cover, and then contribute the difference (expected out-of-pocket cost). It’s also a good idea to factor in any other expected health costs, such as medication, doctor visits, treatments or surgeries, etc.
- Can I use an HSA/FSA if I also send claims to my insurance company? Maybe - it depends on your insurance plan. To find out, contact your insurance company. If your plan is a PPO, it might. If your insurance will reimburse you, always wait until you’ve received your reimbursement before using your HSA/FSA to cover leftover costs that insurance won’t pay for (you can use Better if you want help filing your claims). This way, you avoid messy tax issues. If your insurance will not reimburse you, don’t worry about filing a claim with insurance and simply use your HSA/FSA to pay for therapy.
- What is a Kip benefit? Companies partner with Kip so employees can use Kip therapy at subsidized rates. The company covers part of your therapy cost, saving you money on therapy.
- Should I still contribute to an HSA/FSA if my company offers a Kip benefit? Yes! You can use pre-tax HSA/FSA funds on many health care costs in addition to therapy, such as: contact lenses or glasses, copays, dental care, and any out-of-network health expenses that count toward your deductible. With a letter from your doctor, you can even use HSA/FSA funds for over-the-counter medicines for acne treatment, allergies, and cold medicine. If you take anything away from this guide, we hope it’s that you can get FREE money for therapy and other medical expenses by opening up an HSA or FSA account.
- How do I use my HSA/FSA funds if I have a Kip benefit? You can use HSA/FSA funds to pay for your employee contribution. If you are filing claims with your insurance, remember to file those claims before you submit a reimbursement to your FSA.
**To set up an HSA or FSA, contact your HR department. Most companies will offer HSAs and FSAs as a regular benefit to their employees.
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