Take advantage of tax-free dollars to buy hearing aids and accessories
Paying for hearing aids is a concern for many people—but there’s good news. Both health savings accounts (HSAs) and flexible spending accounts (FSAs) can be used to help pay for hearing aids. Read on to learn more about the specifics of how these accounts work to understand how to maximize your pre-tax dollars to fund your hearing aid purchase.
Millions of Americans have access to tax-free flexible spending accounts (FSAs) or health savings accounts (HSAs), both through employer-sponsored and private healthcare plans. Pre-tax contributions to these accounts can be used to pay for eligible medical expenses and products—and that includes hearing aids.
While both kinds of accounts can help you save money, there are some important differences between FSAs and HSAs. Get to know the details of both so that you can make the smartest use of your money when buying hearing aids.
Good news! Getting the hearing care you need, while saving money, is possible. Make an appointment at your closest Miracle-Ear to find out more.
A health savings account (HSA) is a tax-advantaged financial tool designed to help people save and pay for a wide range of qualified medical expenses. HSAs are only available in combination with a high-deductible healthcare plan (HDHP). HDHPs have deductibles of at least $1,600 for individuals or $3,200 for families, with out-of-pocket maximums of $8,050 and $16,100 respectively*. One of the main attractions of HSAs is that they offer account holders an array of tax benefits:
Contributions can be funded, as noted above, through pre-tax deductions from your paycheck, if your employer offers HSAs. Alternatively, if you have a private health insurance plan, you can take tax deductions for your annual contributions. Keep in mind that, as of 2024, annual contributions are capped at $4,150 for individuals or $8,300 for families.
These accounts have two additional benefits: they roll over and they’re portable. That means that if there’s money in your account at the end of the year, you get to keep it. And if you change jobs, your HSA is still yours to use, and you can continue to contribute to it if you still have an HDHP.
HSAs give people a reliable resource that they can tap into for medical expenses, with the bonus of flexibility and long-term savings potential. If you have an HDHP, an HSA is a valuable financial planning tool that you can use for health-related expenses.
A flexible spending account (FSA) is an employer-sponsored healthcare benefit that allows you to set aside pre-tax dollars to cover eligible out-of-pocket medical expenses. Like HSAs, FSAs provide a way for people to reduce their taxable income while setting aside money for qualifying medical expenses. The contribution limit for FSAs is $3,200 as of 2024.
The amount you contribute to an FSA is something you typically need to decide on during an enrollment period. Based on the amount you select, the FSA is then funded with pre-tax contributions from your paychecks. That said, you have access to your full annual contribution right away because FSAs are “pre-funded”—so you don’t need to wait to make a purchase.
FSAs differ from HSAs in that they do not typically roll over from year to year—your contribution is “use it or lose it.” Employers have the option to offer partial rollover or a grace period; check if yours does before you let any money go unused. FSAs are also not portable, so you need to use yours up if you change jobs. It’s also worth noting that in most cases, you can’t have both an HSA and an FSA, unless your employer offers what’s called a “limited purpose FSA,” which has tighter restrictions on how you can use the funds.
An FSA can be a valuable asset in your financial toolbox, helping you save on necessary medical expenses.
With the differences between HSAs and FSAs, there are a few things to consider when you want to maximize the money that you’ve set aside.
Most importantly, use your FSA contributions before the end of the year—otherwise, your hard-earned money will be lost. Many people wait until late in the year to pay for items with FSA dollars, but remember that the money is available to you at any time. If you’re considering buying hearing aids with FSA funds, remember that it’s better to address hearing loss sooner rather than later. Most people already wait longer than they should, and putting off hearing improvement can have broader effects on your health, both physical and mental.
A bit of planning goes a long way when it comes to using your HSA to its fullest benefit. Take the time to do a bit of forecasting about what your out-of-pocket medical expenses might be in the coming year—copays on any regular appointments you need to make, medications and so on. If you know that hearing aids will be a priority for you, factor them in as well. These estimates can help you determine how much you should contribute. If it’s within your means, contributing the maximum amount and investing it can yield even more benefits over the long term.
If you want to take an in-depth look at everything that you can pay for using HSA and FSA funds, the IRS outlines qualifying medical expenses in its Publication 502. Account administrators also have detailed lists or tools on their websites that help users understand which are FSA or HSA-qualified expenses. It’s important to review these resources and, if anything is unclear, speak to your plan administrator or a tax professional. Using funds for non-qualified expenses can incur taxes and penalty fees. It’s also crucial to keep records of medical expenses and get itemized receipts for your purchases in case you need to submit documentation for HSA or FSA reimbursement.
On the complex topic of insurance, HSAs, FSAs and how they relate to hearing aids, a lot of questions are bound to come up. Here are quick answers to some common queries.
Finding the right type of hearing aid is a highly individual process. At Miracle-Ear, we conduct a unique evaluation that takes your specific hearing loss into account, as well as your lifestyle, goals and comfort. Another factor is finding the hearing aids that are right for your budget and considering how you plan to pay for them. Your Miracle-Ear care team will take all of these things into consideration. You’ll work together to find the right device, talk through the process of using your HSA or FSA to pay for your devices and address any other considerations, including insurance for hearing aids.
Make an appointment with an expert hearing care specialist at your neighborhood Miracle-Ear location to find the hearing aids that will fit your lifestyle and address your hearing care needs best.
