Savings and Spending Accounts
The City of Chattanooga offers you two (2) different types of spending accounts for you to invest your funds on a tax-free basis to pay for qualified medical expenses.
The flexible spending account (FSA) works similarly to a layaway account: you make an election at the beginning of the year and you have access to that entire amount on the first day of the plan year. You pay the money back in fixed amounts over the course of the year. Your enrollment in this type of plan is not tied to any particular medical plan; you can have an FSA even if you do not participate in the City's medical plan.
The health savings account (HSA) in an individually owned account that has more flexibility in terms of what you can invest; you can choose when you contribute to the account and how much.
This table can help you distinguish between the two:
Flexible Spending Account (FSA) for Health Care and Dependent Daycare Expenses and Spending Accounts
This is an account that allows you to contribute pre-tax dollars on an annual basis to use for health care and dependent care expenses. You can participate in this benefit even if you are not enrolled in the health plan. Eligible expenses are based on IRS regulations, which include copays, coinsurance, and other medical expenses, including the cost of care of any eligible dependent care for working parents.
If you are enrolled in the HDHP, you are ineligible to participate in the health care FSA. However, you may elect to contribute to a dependent care FSA. By law, you must indicate your elections for FSA benefits annually.
Annual Contributions Limits:
Health Care Spending Account: Maximum of $2,750
Dependent Care Spending Account: Maximum of $5,000
Compare the Numbers...
Health Savings Account (HSA)
When you sign up for the High Deductible Health Plan (HDHP), you will have a Health Savings Account (HSA) in which you accumulate savings to pay for medical expenses that make up your deductible or are not covered by your insurance plan. HealthEquity is the HSA administrator. If you enroll, an account will be opened at HealthEquity and payroll contributions will be loaded to that account.
The Health Savings Account is an employee-owned account. This means the funds you contribute and receive are portable and rollover from year to year. Also, money remaining in your account can be saved for retirement.
Building Your Balance
2020 Annual Maximum Contributions to your HSA:
Employee - $3,550
Family - $7,100
Catch-up Contribution for those 55+ - $1,000