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Be Careful About The Rules Around Saving For Healthcare

With so many changes happening with our tax code every year, it is really important that you sit down and review how this will affect your family finances. As 2015, approaches us, one tax issue that could affect your family center around the changes intertwined with Flexible Spending Accounts (FSA’s) and Health Savings Accounts (HSA’s).

In many prior years, traditionally FSA’s were you use it or you lose it plans if the money is not spend by year-end. Since 2013, you were allowed to roll money over from the prior year and carry it forward into the current. However, going into 2015 there is a BIG twist that you should consider before the 2014 year is over.

If you elect to carry forward the $500 in your FSA plan from 2014 into 2015, you will immediately become ineligible to participate in a Health Savings Account for 2015. This is true for the entire calendar year. So, if you opted to change plans from a low deductible plan to a high deductible plan tied to a Health Savings Account for 2015, it may actually be in your best interest to NOT carry a $500 balance over from your current FSA account into 2015. Essentially, you would nullify your health insurance and savings strategy. Note that the rule applies to general purpose FSA’s, and note FSA’s used for specific uses such as dependent care of dental expenses.

That is one big tax issue to watch for going into 2015!

Written by: Ted Jenkin
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About the author  ⁄ Ted Jenkin @ Your Smart Money Moves

Ted Jenkin @ Your Smart Money Moves

Hey!

My friends and family all think I’m a workaholic, but I say I’m just a guy that loves to help people do better in life.

My mother is still the only one that calls me by my real name Theodore Michael, my wife calls me Teddy, but for the rest of you it is just plain old Ted.

Ever since I was a little kid, I always loved money and being an entrepreneur. In fact, I still have cassette tapes of me talking to my grandmother at the age of five and my mother tells me all the time how much I played with money as a kid...

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Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor regarding your individual situation. 

Background and qualification information is available at FINRA's BrokerCheck website.

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